After the joint intervention from Japan and the US, the yen currency has been a key focus again in recent weeks. And that just amplifies all the scrutiny on the upcoming BOJ policy decision, with some speculation that the joint intervention included some promise on Japan's end to push for higher interest rates.While a more hawkish BOJ may be a driving factor to potentially help defend the yen, is it going to be what turns the tide? The yen has been heavily punished amid a multitude of factors since late last year already. And here's a good reminder as to why those factors will continue to pressure the currency, besides the ongoing US-Iran conflict.1. Japan's fiscal situation remains fragileThis is the whole premise of the Takaichi trade that has been running since October last year. Her appointment has only heightened worries about Japan's fiscal predicament and that has not gone away.The country's debt-to-GDP ratio remains well above 200% and continues to rank as the highest among all major advanced and big economies. As such, they can't really withstand an aggressive tightening cycle especially. And so, the BOJ has a very fine line to maneuver in this case.That as higher interest rates will immediately balloon the Japanese government’s cost of servicing its massive national debt. That means no matter how much the BOJ wants to talk about raising interest rates, the "terminal rate" is arguably much lower than other major economies like the US and/or Europe.So, that does knock down some credibility of any aggressive tightening that could structurally underpin the yen currency in the big picture.2. Japan's real interest rates are still a problemAnother troubling spot is that real interest rates in Japan are still very much negative at this juncture. Even with the BOJ policy rate at 1% or potentially being driven to 1.50% moving forward, that is still holding below underlying inflation - in which the central bank argues is close to 2% currently.It's still a key as to why the yen continues to struggle against all odds, even with the recent resurgence in Japanese bond yields.Currency traders don't only trade on nominal yields/rates but also on real rates. So unless the BOJ does intend to take a very bold step to change the dynamics of the landscape, then it's safe to say that this is one spot that will stick for quite some time.Even if we are seeing some narrowing in rate differentials in the past two years, especially in the bond market, the rates argument is still very much in favour of the US. Hence, the carry trade math is still working - albeit less effective.But then again, it's best to remember that Japan's bond yields are not only rising because of the inflation/BOJ outlook. It is also largely to do with rising risks on the fiscal side of things and therein lies another set of risks for traders and investors in going in search of Japanese assets.3. BOJ has to deliver something that will truly surprise marketsAt this stage, traders are already expecting at least one rate hike by the BOJ by year-end. And looking to June 2027, traders are also pricing in ~72 bps of rate hikes by the BOJ already. That translates to three more hikes between now and the middle of next year.The remaining one priced in for this year fits with the current pace set by the BOJ i.e. moving roughly once every half year. And the two for the first half of next year basically means a slight step up in that pace.So even if the BOJ feels more bold, they have to deliver at least three rate hikes in the four meetings in 1H 2027 to really signal that they mean business. Otherwise, anything short of that will just fit with what markets have already priced in at best. And at worst, a more timid approach (as they are known for) will just put more pressure on the yen currency instead. That is should they walk back from any further aggressive signaling approach that we are seeing in recent weeks.In short, the onus and the pressure is on the BOJ to keep a more hawkish rhetoric and deliver something that will echo stronger across broader markets.Otherwise, currency traders have very much priced in what is to be expected above and it will take a lot more to really convince market players of any sustained reversal momentum in the yen trajectory.The only real hope now for the yen and the BOJ is that all this tough talk and narrative will eventually buy enough time for the US-Iran conflict to die down and turn into less of a headwind for the Japanese economy. Let's just say that has already been their game plan for at least five months, yet here we are and still no closer to the end of the war. This article was written by Justin Low at investinglive.com.