NFXStreet notes that USD/JPY remains confined to a narrow range. But Kit Juckes, Chief Global FX Strategist at Société Générale, expects the pair to surge higher above the 112 level.

“USD/JPY has, in 2021, reverted to closely tracking interest rate differentials, notably the 2y2y rate spread. At the very least, that’s a warning that if the Fed is successful in escaping the zero-rate bound (and Japan isn’t), USD/JPY could be in for a break higher.”

“...if the market gains rather than loses conviction in a Fed rate hike in late 2022 or early 2023, then USD/JPY is going to struggle to get back below 108 at any point and will in due course break above 112.”