US inflation figures beat estimates on all measures. Economists at Rabobank expect the USD/JPY pair to advance nicely towards 135 in the near-term before turning back lower to the 132/30 region later in 2022.

USD/JPY is essentially tied to the outlook for US yields

“The strength of the US May inflation report increases the potential for further gains in USD/JPY on a one to three-month view to 135. This assumes that the BoJ maintains its commitment to its current easy policy settings in its June meeting, as seems very likely.”

“We remain sceptical on the likelihood of actual FX intervention since this would directly oppose the direction of BoJ policy. It would also be in conflict with the agreement that Japan has maintained for years as part of the G7 to allow markets to set exchange rates.”

“We expect that lower US yields should allow USD/JPY to adjust back to the 132/130 region later in the year.”