Economists at Bank of America Global Research have revised up USD/JPY forecasts. They expect the pair to reach 123 in the third quarter amid excessive supply of yen into the summer.

Excess supply of JPY into summer

"We raise our above-consensus USD/JPY forecast – 123 by 3Q22 and 120 at year-end (vs 118 previous, 116 consensus).”

"We except excess supply of JPY into summer: (1) energy imports, (2) university funds' investment, (3) policy divergence.”. 

“Longer-term, stretched valuation and supply-led nature of energy price increase pose risk of a sharper JPY rebound in 2023.”