USD/JPY preserves its bullish momentum and climbs above 137.00. Economists at BBH note that the pair could test last week’s high near 140.

BoJ Board Member Nakamura remains dovish

“USD/JPY is trading at the highest level since December 1 near 137.65 and a clean break above 137.50 sets up a test of last week’s high near 140.”

“Bank of Japan Board Member Nakamura said the bank needs to continue with monetary easing as the economy is still recovering from the pandemic. He warned that tightening monetary policy could bring back deflation as the economy still has a negative output gap. Lastly, Nakamura said that is not yet time for a BoJ policy review. These comments are consistent with Kuroda’s earlier this week and support our view that the BoJ is on hold for the time being.”