The yen has been on a wild ride, with USD/JPY briefly trading at 125 on Monday, before correcting lower to the 123/124 region. Japanese officials have started to voice some concern on the yen's high volatility, which could offer some support. Still, economists at ING believe that the USD/JPY pair can return to 125 today.

Japan getting nervous about FX volatility

“Japan's top currency diplomat, Masato Kanda, expressed high concern about the volatility of the yen, which risks harming economic stability, and pledged to work with the US Treasury and other countries to “respond” to excessive FX moves.”

“We think the yen remains highly vulnerable as long as bond yields continue to press higher – and a return to 125 today is not off the charts.”

“More indications that Japan is taking action to curb JPY volatility could offer some support, but that appears to be a secondary factor compared to keeping yields well within the YCC range.”