After spiking towards a peak around 131.50 from near 128.50 right after the BoJ decision, USD/JPY quickly retraced all the way back below 129.00. Economists at Credit Suisse still believe that the pair could slump to 120.00.

BoJ stood its ground this time

“The decision to leave YCC intact, and also to leave current 10y JGB targets and trading bands unchanged, was a disappointment to many in the market. But JPY price action since the meeting is in line with our inclination to anticipate another wave of speculation that YCC will end at the March meeting.”

“Our USD/JPY view in our Q1 Outlook was to sell rallies, with an initial target at 125.00 and a possible extension as far as 120.00 in high-vol environments. We see no reason to change this, despite the fact that the BoJ stood its ground this time.”