USDJPY could see a large downward reversal at the end of the first quarter of 2023 — ING

March 2023 will be especially volatile for the USDJPY. The ING Economists they believe the pair could trade at 130 by the end of next year.

The first quarter of 2023 will be a pivotal quarter

“The default view is that moderate BOJ Governor Haruhiko Kuroda will not be removed. However, the end of Governor Kuroda’s term on April 8, 2023 will undoubtedly lead to frenzied speculation about his replacement and about whether a less moderate candidate emerges.

“In the first quarter of 2023, a lot of attention will be paid to the Japanese wage round, in which an increase in wages is a prerequisite for the BOJ to tighten its policy. The Fed’s dot charts will also be published in this period (March 22), which may be the first real opportunity for the Fed to recognize a turn in the inflation profile.Therefore, this period (March/April) could see a large USDJPY reversal to the downside. “.

“Unless we end up with 6%+ US policy rates next year, we would expect the USDJPY to end 2023 closer to 130.”

Source: Fx Street

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