USD/JPY Volatility Rises as Intervention Risk Escalates and US Payrolls Loom

USD/JPY is influenced by US front-end rates, which remain the dominant driver of its movements. The pair's fundamentals suggest it should be pushing higher due to the US economy's strength compared to other major developed nations, including Japan.

The threat of intervention continues to affect USD/JPY, with recent behaviour suggesting that 158 is no longer a safe zone for the Japanese authorities. This has created uncertainty and volatility in the market.

This week's key event is the US non-farm payrolls report for September, which will likely have a significant impact on Fed pricing and interest rates. A weak labour market could shift the committee's reaction function towards both sides of its mandate.