Institution: The Central Bank of Japan's rate hike this week has become a certainty. The risk lies in dovish rate hikes.

On January 23, Jinshi Data reported that Christopher Wong, forex strategist at OCBC Bank, stated in a research report that the market has almost fully priced in the expectation of a 25 basis point rate hike by the Japanese Central Bank on Friday. "From a market perspective, the risk lies in a dovish rate hike, as this may indicate that the downside of the USD/JPY may be further constrained." In addition, "there is also a risk that the Japanese Central Bank may be inclined not to make early commitments to future guidance in order to avoid unnecessary yen strength that could undermine any progress." However, OCBC Bank still expects the USD/JPY to trend lower based on the Fed's rate-cutting cycle and the potential for further policy normalization by the Japanese Central Bank.