Fed independence will remain a huge theme for financial markets this year, ING's FX analyst Chris Turner notes.

USD/JPY to target 145 for the end of September

"The topic should be back in the headlines this Thursday, when Trump appointee Stephen Miran undergoes Senate confirmation hearings for his seat on the Fed's governing board. The thesis of President Trump seeking a majority on the erstwhile independent Fed rate-setting committee is dollar negative given the prospect for real interest rates to sink."

"Given Japan's large Balance of Payments surplus, the yen's undervalued status and its liquidity, USD/JPY will likely play a major role in a dollar bear trend driven by concerns over the Fed. The early August high of just under 151 could prove significant, and USD/JPY could well struggle now to get above the 148/149 region."

"We continue to target 145 for the end of September, but let's see how the negatives of US jobs/Fed independence questions play out against the seasonal dollar strength story discussed above."