Forex
Fed Hike Anticipation and Energy Prices Set Stage for USD/JPY Volatility
The upcoming Fed meeting will be the main event this week, with markets pricing in a 90% chance of a 25-basis-point rate hike.
Fed Chair Kevin Warsh faces a credibility test if he fails to deliver the expected hike, which could trigger a disorderly reaction and damage market confidence.
The BOJ's decision on Friday will also be closely watched, with markets expecting a 25-basis-point increase but looking for signs of hawkishness in the statement and Governor Ueda's press conference.
In the background, energy prices remain a key factor in determining USD/JPY's performance, given their strong correlation with US Treasury yields.