Yen Weakens Past 158 Amid Fed Rate Hike Expectations

The Japanese yen has weakened past 158 per dollar, reversing recent gains as interest rates and Treasury yields continue to rise. The dollar's strength is driven by expectations that the Federal Reserve may need to raise interest rates further to combat energy-driven inflation.

The US-Japan interest-rate differentials are also putting pressure on the Japanese currency, with traders expecting further Fed tightening outweighing the Bank of Japan's rate hikes.

However, softer-than-expected US PCE inflation data has prompted traders to reduce bets on a Fed rate hike in October, tempering the dollar's rise.