Previewing the Bank of Japan's (BoJ) upcoming policy meeting, Rabobank analysts said that they expect the BoJ to revise up its inflation forecasts and lower its growth expectations.

We see USD/JPY returning to the 130 area in Q2 next year

"If USD/JPY were to spike to 145 or beyond, the inflationary impact of the BoJ’s easy policy would become greater and market speculation that the BoJ may capitulate on its YCC policy would likely increase."

"In our view, the prospect of lower US yields and the JPY’s own safe haven credentials could allow USD/JPY to back away from the 140 area in the coming months.  This would allow the BoJ further breathing space.  It is possible that signs of wage inflation could allow the BoE to adjust its YCC policy as soon as this autumn, though the signs of slower global growth could strengthen the BoJ’s resolve to hold out on any policy adjustment until next year."

"We see USD/JPY holding around current levels on a 1 month view.  We see USD/JPY returning to the 130 area in Q2 next year on the assumption the market may be then looking ahead to easier policy from the Fed."