US Dollar Surges Against Yen Amid Fiscal Concerns and Fed Credibility Doubts

The US Dollar (USD) is strengthening against the Japanese Yen (JPY), reaching near 160.00 during the European trading session on Tuesday.

The USD/JPY pair's gain comes as the US Treasury Yields surge to a 19-month high at 4.78% and approach the multi-year high of 4.81%, amid fiscal concerns and doubts about the Federal Reserve's credibility.

According to strategists at BNY Markets, the rate repricing is accompanied by a notable move at the back end of the curve, with both the 10y and 30y yields increasing since Friday. They attribute this to fiscal concerns and doubts about institutional credibility rather than mere inflation expectations or policy conjectures.

The Japanese Yen is struggling to attract bids despite market experts' confidence in the Bank of Japan raising interest rates in its upcoming policy meeting.