USD/JPY is trading at its highest level in three weeks above 114.00. Economists at ANZ Bank expect the Japanese yen to weaken amid a choppy trend. Subsequently, the USD/JPY pair could reach the 116.00 level.

The JPY is likely to become more volatile in the year to come 

“The stronger US economy and a global tightening cycle will exacerbate the low yield status of the currency and provide a tailwind for further weakness.” 

“We anticipate that the cross could weaken above 116. However, the path there will not be in a straight line. As global inflation drives rising policy uncertainty, there is a rising likelihood that market volatility is higher on average. Through these episodes the JPY will likely strengthen somewhat, however, we do not think that they will occur frequently enough to shift the currencies trend.”