USD/JPY prints fresh six-year high at 119.50 on higher odds of seven rate hikes by the Fed in 2022

• USD/JPY has inked a fresh six-year high at 119.50 as DXY strengths on six more rate hikes in 2022.
• An unchanged BOJ’s policy has weighed pressure on the Japanese yen.
• This week: Fed Powell’s speech, Biden-NATO meeting, and Japan’s CPI will hold significant importance.

The USD/JPY pair has printed a fresh six-year high at 119.50 as DXY strengthens amid rising bets over six more rate hikes by the Federal Reserve (Fed) this year and souring market mood on uncertainty over the US President Joe Biden meeting with NATO allies on Thursday.

To corner the galloping inflation, Fed has been ‘loud and clear that the market participants should start bracing aggressive policy tightening this year. Fed policymakers have increased their interest rates by 25 basis points (bps) last week and are drawing an action plan to put forward six more rate hikes this year. This has underpinned the greenback against the Japanese yen. On the contrary, the Bank of Japan (BOJ) has kept its interest rate policy unchanged on Friday, which has also contributed to driving the asset higher.

The US dollar index (DXY) has overstepped 98.00 amid souring market sentiment. US President Joe Biden will meet other NATO allies on Thursday for a diplomatic solution to the Russia-Ukraine war. This may also lead to additional sanctions on the Russian economy and henceforth escalation in the tensions between the nations. Meanwhile, the 10-year US Treasury yields have surged near 2.3% as the US economy is shifting out from the new normal of grounded interest rates.

Although the headlines from the Russia-Ukraine war will remain a major drive, investors will also focus on Fed’s Chair Jerome Powell's speech, which is due on Wednesday. While the Japanese docket will report Consumer Price Index (CPI) numbers on Thursday.