As markets brace for Wednesday’s Bank of Japan (BoJ) monetary policy meetings, multiple investment banks and analysts convey their forecasts for the USD/JPY pair that’s been lately gaining more attention, especially after the BoJ’s tweak to the Yield Curve Control (YCC).

Analysts at Goldman Sachs (GS) are from the same lot and anticipate the Yen pair to decline further by suggesting a 3.0% drop, or a fall to just below the 125.00 level. However, the GS also states that the bigger driver of the cross should be US rates rather than domestic monetary policy.

The GS also signals that their economists expect the BoJ to keep YCC in place with possible further tweaks to improve its sustainability. However, the increased risk of a complete exit means they see more limited room for USD/JPY upside.

It’s worth noting that majority of market estimates don’t suggest any major change to the BoJ’s monetary policy. However, hints for the exit from the ultra-easy money days will be closely observed for clear directions.

That said, the Yen pair began the week’s trading by dropping to the lowest levels since late May 2022 before bouncing off 127.21, mildly offered near 128.30 by the press time.

Also read: USD/JPY Price Analysis: Bulls on course for a 129.50 target

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