USD/JPY Surges Ahead of Fed Rate Hike Bets
The USD/JPY currency pair has risen to 154.87 as markets anticipate an expected rate increase from the Federal Reserve this week.
This strengthening of the US dollar has put additional pressure on the Japanese yen, which is also struggling with rising energy costs that are increasing Japan's import bill and putting further strain on its economy that relies heavily on imported energy.
Despite trading near seven-month highs, the yen continues to receive support from expectations of more aggressive monetary tightening by the Bank of Japan, the unwinding of carry trades, and signs of increased capital repatriation by Japanese investors.
The Bank of Japan is expected to raise its policy rate to 1.25% on Friday, which would be the highest level since April 1995, amid growing inflation risks.