The USD/JPY rally has taken a breather over the last week after some strong gains. The highlight of the week ahead will be Thursday’s Bank of Japan meeting where a fresh update on the Outlook for Activity and prices will be published. Economists at ING stay bullish and see substantial gains to the 115.00 level.

Big update from the BoJ

“Back in July, the BoJ had forecast CPI at 0.6%, 0.9% and 1.0% in FY21-23 respectively. We doubt there will be any substantial upward revisions which will prompt a re-pricing of the typically super-dovish BoJ policy cycle.”

“On USD/JPY, we do not want to miss out on a big upmove through 115.00. We have a conviction call that the Fed will have to turn more hawkish – USD positive against the low-yielders.”

“We are very bullish on USD/JPY and see the correction finding support somewhere in the 113.20/70 area.”