USD/JPY Surges on Rising Treasury Yields Ahead of Key Central Bank Meetings

The US dollar rose to its highest level in almost two weeks against major peers ahead of this week's key central bank meetings. The USD/JPY pair recovered from a seven-month low as Treasury yields climbed above 5%, driven by rising oil prices and inflation fears.

Markets are pricing in a 92% probability of a 25-basis-point rate hike at the Fed meeting on Wednesday, taking rates to 3.75-4%. This is up from 85% yesterday. The BOJ is expected to raise rates by 25 basis points on Friday.

The yen has pulled back as markets look ahead to the BOJ decision, which will be closely watched for clues on further tightening. The key focus will be on how strongly the central bank signals its intentions.