We forecast USD/JPY to steadily decline towards 135.00 on a 12M horizon. This is primarily because we expect limited upside to US yields from here. Hence, we expect yield differentials to be a tailwind for the JPY during the year, as G10 central banks, except the BoJ, are likely to commence rate-cutting cycles. 

In addition, historical data suggests that a global environment characterized by declining growth and inflation tends to favour the JPY.