Dollar Surges as Fed Hike Bets Reach Nearly 90%
The US dollar has strengthened against the Japanese yen as investors bet on a Federal Reserve interest rate hike, due to be announced on Wednesday. The USD/JPY pair is currently trading near 154.40 after rebounding from a seven-month low of around 153.00 reached last week.
With inflation data released in August showing higher-than-expected numbers, the odds of a Fed rate hike have risen to nearly 90%. This has led to an increase in US Treasury yields, making the dollar more attractive to investors and pulling flows back towards it.
The Bank of Japan is also due to meet on Friday, with many expecting a 25-basis-point hike. However, since this decision is already largely priced into the market, the yen has not seen any significant buying interest, allowing the dollar to rise further.
From a technical perspective, the USD/JPY pair appears to be holding a bullish bias above its 20-period Simple Moving Average (SMA) at 154.04 and a nearby horizontal floor at 153.99.