USD/JPY: Scope for a substantial rise to 116.30 over the coming week – Citibank

USD/JPY is trading below 114.00 and remains on track to close the second straight week in the negative territory. However, economists at Citibank expect the pair to retest 116.30 next week given expectations for a hawkish FOMC meeting.

Expectations for a hawkish FOMC meeting

“Market now prices in >1 hike for March FOMC and >4 hike for 2022 as a whole. It has been an incredible shift in Fed tightening expectations since the shift by Powell to drop the word ‘transitory’.”

“Near-term resistance in USD/JPT is found at the recent high at 116.30, which could be tested over the next week, given expectations for a hawkish FOMC meeting."