USD/JPY Soars as US Yields Surge and Oil Prices Climb

The USD/JPY currency pair has recovered to around 155.00 after falling to a seven-month low. The recovery is attributed to rising US Treasury yields and oil prices, which are pushing investors towards a potentially more hawkish Federal Reserve on Wednesday.

While the Bank of Japan's surprise hike potential has limited the USD/JPY's upside relative to other dollar FX major pairs, the pair remains supported by the ongoing global bond sell-off. The US 10-year Treasury yields have surpassed 5% for the first time since 2007, driven by surging energy prices and persistent inflation concerns.

The Federal Reserve is expected to raise rates by 25 basis points on Wednesday, with investors questioning whether policymakers will validate expectations for another increase later in the year. A renewed oil shock means there's no case for easing, keeping the dollar supported for a long time.