Given the potential issues involved with maintaining its YCC policy at current settings and the risk that JPY weakness would accentuate any further strength in Oil prices, we see another tweak to policy as likely being on the cards in the months ahead.

While we expect that USD strength will dominate in the coming months, a policy tweak from the BoJ would likely reinforce psychological resistance in the USD/JPY 150.

Our forecast of a move back to USD/JPY 148 on a one-to-three-month view, assumes further policy normalisation by the BoJ.