In the view of economists at Rabobank, the risk of USD/JPY pushing to 140 in the short-term is highly dependent on US yields. Therefore, upticks in US treasury yields will be watched closely.

BoJ’s YCC policy unlikely to be altered in the near-term

“On the assumption that the BoJ’s YCC policy will not be altered in the near-term, the outlook for USD/JPY is likely to be a function of the outlook for US yields. If US yields move higher, USD/JPY could see 140.”

“By the end of the year, the BoJ is likely hoping that signs of domestic wage inflation will allow it more flexibility to consider a policy change without being pushed into it by speculators. In this scenario, USD/JPY is likely to edge lower.”