Paring back of speculation over more immediate BoJ policy shift weighs on the Japanese Yen. However, the USDJPY is set to struggle at between 135 and 137, key resistance levels, economists at MUFG Bank report.

BoJ will abandon yield curve control this year

“The paring back of expectations for a more immediate shift to BoJ policy settings under new Governor Ueda will take some of the wind out the Yen’s sails, and make it harder for the JPY to extend its advance ahead of the BoJ’s policy meeting later this month. We are still of the view though that the BoJ will abandon yield curve control this year so any Yen weakness on the back of maintaining current policy settings is unlikely to prove sustainable.” 

“Furthermore, with US yields having peaked out, it should help dampen upside potential for USD/JPY in the near-term with important resistance levels coming in between 135.00 and 137.00.”