According to MUFG Bank analysts, the Japanese yen should strengthen thanks to the Bank of Japan’s monetary policy expectations. They see a possible drop below 120.00 later in 2023. KEY QUOTE: “USD/JPY continued its decline today and is now 15.5% from its October 21 peak – all three months of Q have provided reasons to buy the yen – BoJ intervention in October and November and YCC swaps in December Also, US inflation has declined faster than expected Will we get another clear reason to sell USD/JPY in January as well? It seems very plausible now. YCC is only sustainable as a policy if it is credible and has the confidence of the market. That confidence is quickly reawakening.” „USD/JPY broke below the 61.8% Fibonacci level (128.61) today, hitting last year’s March-October high, suggesting further downside. Positioning can be overextended until the YCC moves next week, so the risk of a Close correction increases. However, the bearish movement suggests that a full reversal of the 2022 move is possible this year, meaning that levels below 120.00 are plausible later this year.