Economists at ING discuss USD/JPY outlook after the pair moved above 140, sparking the ire of Japanese officials again.

Market is under-pricing the risk of further normalisation in the BoJ’s YCC policy on 16 June

The question is whether policymakers in Tokyo are prepared to ride out another summer of strength in USD/JPY – or will be prepared to take action.

We think the market is under-pricing the risk of further normalisation in the Bank of Japan’s Yield Curve Control policy on 16 June. By the end of Q3, the Dollar decline should be underway.

USD/JPY – 1M 135.00 3M 130.00 6M 125.00 12M 120.00