If the BoJ decides to leave the current policy settings unchanged, then USD/JPY looks as though it can push back to the recent high at 145.

While we cannot rule out a brief foray above 145 this summer, we doubt gains would be sustained - largely because US disinflation bells will ring increasingly louder during the summer and by September we would expect a broad Dollar bear trend to be underway.

If the BoJ surprises the market with a YCC tweak as we forecast, or gives a hint of possible policy adjustment in the near future, then USD/JPY could break lower – perhaps even lower than the recent low of 137 as the market would be taken by surprise. We have 3Q23 and 4Q24 USD/JPY forecasts at 135 and 130, respectively.