USD/JPY Grinds Higher Despite Lower Oil Prices

USD/JPY continued to grind higher last week, despite oil prices falling and softer US inflation readings. The pair received a 'perfect window' to break lower but failed to do so, rebounding back above 160 by Friday's close.

The correlation matrix shows that energy, risk appetite, yield differentials, or the Fed outlook are not driving the pair in any significant way. However, shifts in Fed pricing have shown the strongest relationship over the past week.

This week's event risks are centered around the Federal Reserve rate decision, with Kevin Warsh overseeing his first FOMC meeting as chair. The forecasts, guidance, and what Warsh says in his press conference will be key.