One-week USD/JPY option implied volatility rose for a second session on Wednesday after five days of declines as traders ramp up option activity ahead of the US CPI print. Market participants are using derivatives to position around an inflation read that could alter Fed policy and dollar direction. Short-dated vol and a premium in USD/JPY puts over calls show demand for protection amid lingering fears of coordinated US-Japan FX intervention and sudden dollar weakness; longer-dated vol has also

One-week USD/JPY option implied volatility rose for a second session on Wednesday after five days of declines as traders ramp up option activity ahead of the US CPI print. Market participants are using derivatives to position around an inflation read that could alter Fed policy and dollar direction. Short-dated vol and a premium in USD/JPY puts over calls show demand for protection amid lingering fears of coordinated US-Japan FX intervention and sudden dollar weakness; longer-dated vol has also ticked up as investors buy calls to bet on a later USD/JPY rebound.