USD/JPY Surges to 154.87 as Fed Rate Hike Looms and BoJ Raises Interest Rates

The USD/JPY pair has reached 154.87, as the dollar strengthens ahead of the Federal Reserve rate increase this week.

Higher oil prices have contributed to the yen's weakness by increasing Japan's import bill and energy-related costs for an economy reliant on imported fuel.

Despite this, the yen remains near seven-month highs due to expectations of tighter Bank of Japan policy, carry-trade unwinds, and capital repatriation.

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.