The USDJPY pair has been moving higher in sympathy with US yields rising on lingering inflation fears. The narrative over the first half of August has been that the Fed will likely have to keep rates higher for longer. This is underpinning the USDJPY.

On Wednesday at 19:00 UK time, the FOMC minutes will be released. Arguably, these minutes have less impact than they once did, but there is still potential for volatility. Investors will be looking for any signs of the Fed expecting rate cuts next year. If that picture emerges from the minutes then the USDJPY could quickly reverse its recent gains.

From a seasonal event perspective, the USDJPY has equally gained and fallen over the last 5 years in the 5 days after the FOMC minutes. However, the gains have outstripped the losses. So, will the USDJPY continue tracking higher if the Fed doesn’t paint a more dovish picture moving forward?

Major Trade Risks: The main risk here to be aware of is sudden USDJPY selling on Japanese intervention. Japan’s Finance Minister Suzuki said on Tuesday that they are ‘watching markets with a strong sense of urgency’. Beware, as sudden USDJPY selling could be imminent.

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