USD/JPY Eyes Fresh Highs as Fed Nears Third Rate Hike
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The dollar-yen pair remains firmly underpinned as the Federal Reserve signals it isn't done tightening. Economists tracking the current cycle note the Fed rarely stops at a single hike, and with inflation still elevated and oil prices climbing, a September move looks increasingly locked in.
For USD/JPY, this is the dominant driver right now. Every incremental basis point added to the Fed funds rate widens the yield gap against Japan's near-zero policy rate, reinforcing carry trade demand for the dollar leg.
Traders positioning ahead of the FOMC decision should watch how aggressively officials frame the path beyond September — a hawkish dot plot could extend the pair's upside momentum into year-end.