USD/JPY broke above the 132 level. Still, economists at HSBC expect the pair to inch lower this year.

The BoJ is likely to tweak its monetary policy in 1H23

“We expect another widening of the Yield Curve Control (YCC) range in 1H23. The timing is uncertain, though. The BoJ Governor Kuroda’s last meeting will be on 10 March, and the first and second meetings chaired by the new governor will be held on 28 April and 16 June, respectively.”

“Aside from the BoJ, we think there are other plausible domestic developments that could drive USD/JPY lower in 2023: resident investors FX-hedging their foreign investments, and an improvement in Japan’s balance of payments amid JPY undervaluation (based on its real effective exchange rate) and tourism resumption.”