It appears highly unlikely now that the BoJ will raise rates and/or adjust YCC policy settings again as soon as Tuesday’s policy meeting. 

Furthermore, the recent earthquake in Japan has created additional uncertainty which makes it even less likely that the cautious BoJ will make such an important decision to exit negative rates until they have more clarity over the impact on the economy.

With market participants now expecting no change in BoJ policy this week, the performance of the Yen will be driven by the updated guidance from the BoJ. The JPY could weaken further if the BoJ does not provide a stronger signal that rates could be raised at either the March or April meetings. One potential bearish trigger for the Yen would be if the BoJ lowers the core-core CPI projections although that is not our base case scenario.