USD/JPY is consolidating at the lows. Economists at ING expect the pair to end the quarter around the 128 mark.

Lots of focus on the BoJ

“10-year JGB yields continue to press the topside of the new +/- 0.50% band, with the expectation growing that the band will be widened to +/- 1.00% over the coming months. Despite the BoJ marketing these adjustments as a measure to address JGB market functioning, investors are reading this as BoJ tightening – and Yen positive.”

“Focus on the exit of the ultra-dovish BoJ governor in April means that investors will be very cautious selling the Yen over coming periods.”

“One month realised USD/JPY volatility is still at an incredibly high 16.5% – making the JPY far too volatile for any kind of funding currency – and we think USD/JPY can end the quarter somewhere near 128.”