Assuming that the Bank of Japan takes further steps towards the normalization of its monetary policy, Rabobank economists consider that the pair USD/JPY It will move up to 148 in three months.
BOJ policy tightening would bolster psychological resilience by 150
With the current cap on 10-year JGBs at 1.0%, any YCC adjustment on October 31 is likely to allow yields to rise above this level. Rising JGB yields should remove some downward pressure on the value of the Yen.
Although we expect dollar strength to dominate in the coming months, a policy tightening from the Bank of Japan would likely reinforce psychological resistance at the 150 level.
A firm decision from the Bank of Japan this month is likely to reinforce downward pressure on the yen against the dollar and increase the risk of a move towards 152.
Our forecast of a pullback to $148/JPY three months ahead assumes further policy normalization by the BoJ and continued speculation about a possible exit from negative rates in 2024.
Source: Fx Street
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