Japan's Finance Minister Katayama Satsuki stated on Thursday that the government will conduct further reviews of departmental budget requests and keep government bond issuance at levels that maintain market confidence. She also expressed expectations for the Bank of Japan to adopt appropriate monetary policy to achieve a stable and sustainable 2% inflation target.

These remarks indicate that the Japanese government is currently balancing fiscal sustainability, bond market stability, and monetary policy normalization. On the fiscal policy front, the government faces significant budget demands and debt pressures. Katayama had previously stated that market confidence would be maintained by re-examining revenues and expenditures and reducing unnecessary spending, while avoiding excessive bond issuance that could expand fiscal financing pressures.

Japan's 10-year government bond yield recently climbed to around 3.0%, a 30-year high, drawing increased market attention to the possibility that expanded government spending could push up debt issuance costs. Meanwhile, the government's focus on yen exchange rate movements is also intensifying.

Katayama noted that Japan's previous coordinated intervention with the United States demonstrated its readiness to address excessive exchange rate volatility. Chief Cabinet Secretary Kihara Minoru also stated on Thursday that Japan will continue close communication with the U.S. Treasury Department and work to maintain orderly foreign exchange market operations. The two nations had jointly intervened in late July to stabilize the yen.

Recent USD/JPY movements have been notably driven by shifting expectations of the US-Japan interest rate differential. The Federal Reserve raised interest rates by 25 basis points on Wednesday and signaled the possibility of further hikes, pushing the U.S. dollar index to around 100.30, while the 2-year U.S. Treasury yield rose to approximately 4.7153%. Dollar strength is weighing on the yen, with USD/JPY climbing to around 155.50 during Thursday's Asian session, well above the 152.89 low seen in early September.

The Bank of Japan now stands as the key variable for the next phase of USD/JPY movement. Markets currently anticipate the BOJ could raise its policy rate to 1.25% at the September meeting, the highest level in 31 years. However, greater attention is focused on whether Governor Ueda Kazuo will signal further rate increases ahead. If the BOJ emphasizes that inflation has become persistent and hints at room for continued policy tightening, expectations of a narrowing US-Japan rate differential could strengthen, providing support for the yen. Conversely, if policy messaging turns cautious while the Fed maintains its hawkish stance, USD/JPY could remain elevated.

Fiscal policy will also influence the exchange rate through the JGB market. If the government can strictly control budget demands and bond issuance, reducing concerns over fiscal expansion, this could help stabilize the JGB market and improve risk pricing for yen-denominated assets. However, if fiscal spending continues to expand and bond yields keep rising, the market will need to assess whether the yield increase is driven by monetary policy normalization or by fiscal risk premiums, as these have different implications for the yen.

At present, USD/JPY is in a repricing phase between the Fed's hawkish posture and the BOJ's potential tightening. On one hand, rising U.S. rates and dollar strength are pushing the pair higher. On the other hand, Japan's enhanced fiscal discipline, commitment to addressing excessive exchange rate volatility, and the BOJ's potential rate hike could all limit further yen depreciation. Market participants should focus on the BOJ's policy statement, Governor Ueda's remarks, JGB yield movements, and U.S. interest rate changes.

From a daily chart perspective, USD/JPY has rebounded from the 152.89 level and is now back in the 155.50鈥?56.00 zone, shifting from a corrective structure to a rebound structure. To the upside, the 156.00 level is the first resistance to watch. A decisive break could open the path toward 156.80 and 157.50. To the downside, the 155.00 round figure is the initial support, followed by the 153.90鈥?54.00 area. A renewed break below 153.90 would significantly weaken the short-term rebound structure. Overall, USD/JPY remains in a high-level rebound phase, though technical resistance around the 156.00 level warrants close observation.

On the 4-hour timeframe, USD/JPY has formed a clear rebound structure with short-term moving averages turning upward again, supported by dollar strength. However, the 155.80鈥?56.00 zone contains previous trading density resistance. If prices fail to break through this area, a short-term pullback remains possible. A breakout and hold above 156.00 could open further upside, while a break below 155.00 would raise the risk of a retreat toward 154.00 to find new support.

The Japanese government is currently working to stabilize market confidence through rigorous review of budget requests, controlled bond issuance, and strengthened fiscal discipline, while continuing to emphasize the importance of the BOJ achieving its stable 2% inflation target. USD/JPY is being driven by the dual forces of a hawkish Fed and potential BOJ tightening. In the near term, U.S. interest rates and dollar dynamics remain the primary drivers of the exchange rate, while the BOJ's policy path and Japan's stance on excessive currency volatility will determine whether the yen can regain sustained support. The 155鈥?56 USD/JPY zone therefore emerges as a critical price range for market observation in the near term.