First, there remains a non-negligible risk of a hard landing in DMs, which may reignite demand for safe-haven assets such as the JPY. 

Second, the BoJ could potentially surprise with a more aggressive tightening effort than markets anticipate. Note that there are multiple parameters the BoJ can alter from the benchmark rate, the three-tiered system of interest rates and YCC. Bloomberg has also reported that the BoJ may end YCC while spelling out in advance the quantum of bond purchases, perhaps to prevent a sharp rise in long-end yields.

Conversely, if the BoJ maintains its policy settings in March, the USD may see some immediate upside against the JPY and pare back its losses, depending on the central bank’s messaging and guidance on April’s monetary policy meeting.