USD/JPY is creeping up again. Economists at ING expect the pair to climb towards the 130 levels by end-2022.

The biggest risk is that the Bank of Japan becomes less dovish

“We think a front-loaded Fed tightening cycle, a dovish BoJ and a deteriorating Japanese balance of payments position on the back of the fossil fuel spike will keep USD/JPY bid for most of the year – and it should be nearing 130 by year-end.” 

“The biggest risk is that the BoJ becomes less dovish – as evidenced by it allowing 10-year JGB yields to trade above 0.25%. That is not what we forecast.”