USD/JPY Rises as Oil Prices Boost Dollar Ahead of Fed Decision

The Japanese Yen has slipped for the second straight day as the US Dollar rises, driven by higher oil prices and inflation expectations. The USD/JPY pair is trading near 155.20, having reached a seven-month low last week.

The surge in oil prices, with West Texas Intermediate (WTI) rising over 3%, has pushed up US Treasury yields, making the safe-haven Dollar stronger. This, combined with firm labor figures and strong economic data from Japan, is leading markets to expect a rate hike from the Federal Open Market Committee (FOMC) on Wednesday.

The Bank of Japan (BoJ) meeting on Friday is expected to deliver a 25 basis points (bps) rise in interest rates, with some speculating that this could be the start of a new tightening cycle. The BoJ's decision will likely influence the Yen's direction in the short term.