Economists at Credit Suisse expect the USD/JPY to extend its decline toward the 125 level.

Yen strength can persist towards USD/JPY 125

“We were wrong in early Jan setting the 125 level as our end-Q1 target, as excessive positioning, a slothful BoJ and upside US / European inflation surprises delayed JPY appreciation. But any real hint that the BoJ could shift away from YCC would likely create another wave of interest in long JPY positioning, given now-greater concerns about global macro fragility. Even without that shift, arguably JPY assets are looking more attractive anyway to Japanese investors.”

“If US debt ceiling fears gather pace into the end of Q2, USD/JPY could extend lower beyond 125.”