USD/JPY: BoJ policy moves likely to be modest in total, capping upside potential for the Yen – Rabobank

FXStreet Insights Team FXStreet

USD/JPY has dropped as the market adjusts to the prospect of a new era for the Bank of Japan (BoJ). Economists at Rabobank analyze the pair’s outlook.

BoJ to retain a cautious pace on policy normalisation, curtailing upside potential for the Yen

Bets that the BoJ may pull the plug on its negative interest rate policy on March 19 have surged. Hopes that the Japanese industry may also have turned a corner and finally shrugged off the trauma and behaviours which followed the bursting of the economic bubble more than 30 years ago have also risen.

BoJ policymakers have indicated that they are prepared to exit the negative rate policy this spring. But BoJ policy moves this year are likely to be modest in total and this will likely cap upside potential for the JPY.

We expect a move to USD/JPY 140.00 on a 12-month view.

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FXStreet Insights Team

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