Expectations are for the Fed to hike by 50bps at their meeting next week and then to signal another 50 bps hike. Jerome Powell has said that the neutral rates (at 2.4%) is the right level for rates by year end. However, if the Fed hike by 50bps and start to show worries over slowing US growth then markets will begin to sense a pause in rate hikes from the Fed. That can result in a fall in US10Y yields and that drags the USDJPY lower too.
It is interesting to note that the USDJPY now has a strong period of seasonal weakness ahead. Over the last 15 years the USDJPY has fallen 10 times between June 13 and September 01 with an average fall of -1.85%

Major Trade Risks:
If the Fed are more aggressive in the face of high US inflation then expect the USDJPY to keep gaining.

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