USD/JPY Plummets Amid BoJ Intervention Fears and Hawkish Hike Expectations
The USD/JPY has taken a sharp turn downward in recent trading sessions, dropping approximately 300 pips from its overnight highs. The suspected intervention by the Bank of Japan (BoJ) and expectations of a hawkish BoJ hike have contributed to the yen's strength across the board.
The possibility of a reverse carry trade driving flows back into the yen has also been discussed. As the focus shifts back to the US dollar, the release of ISM services PMI later this week and the August jobs report on Friday will play crucial roles in determining the USD/JPY's trajectory.
The BoJ's rate decision at the end of September will add to the uncertainty surrounding the USD/JPY forecast. Markets are now pricing around 49 basis points of tightening by year-end, up from 22 basis points before the late-July intervention episode.