Dollar Breaks Above Seven-Week High as USD/JPY Remains in Focus

The US dollar has made up for its prior week's sell-off with a strong breakout following the Fed and BoJ rate hike announcements. The USD/JPY pair remains the driving force behind global FX markets, with the reaction to the BoJ meeting highlighting that markets were looking for something more from Kazuo Ueda.

Despite this, the BoJ did hike rates, but without catching anyone by surprise. The fact that Kazuo Ueda refrained from explicit timelines for future hikes contrasts with the Fed's forecast of another hike by year-end. This helped drive the USD/JPY pair to a strong showing around FOMC and BoJ rate hike announcements.

The weekly chart shows that the USD has pushed above the 100-level for the first time since the sell-off back in July, which was driven by the dual intervention in the Japanese Yen. The question now is whether we see another exogenous push of pressure in the crowded carry trade that still has yet to unwind.