USD/JPY Holds Above Mid-154.00s Amid Hawkish Rate Hike Bets

The Japanese Yen continues to suffer losses against the US Dollar as the greenback maintains its bullish trend ahead of key central bank announcements. The USD/JPY pair trades above mid-154.00s during the Asian session on Tuesday, with spot prices lacking conviction among traders.

The Federal Reserve and Bank of Japan are set to release their policy decisions this week, with the Fed's announcement scheduled for Wednesday and the BoJ's on Friday. Expectations for an imminent rate hike have been firming up, leading to a focus on the central banks' policy outlook going forward.

Analysts at DBS note that speculative positioning has shifted in favor of the Yen, with investors unwinding their short JPY positions following July's joint US-Japan currency intervention. However, even former BoJ-tightening skeptics are now acknowledging the case for higher rates, strengthening expectations for a hawkish hike on September 18.