Yujiro Goto and Yunosuke Ikeda, Global FX Strategist at Nomura, expect renewed strength in USD/JPY in the new fiscal year for 2016/17, calling for 122 by end-2016. Key Quotes "USD/JPY depreciation has accelerated in Q1. Although the BOJ introduced the negative interest rate, its failure to defend 115 may encourage domestic investors to be more conservative in the near term." "As a result, JPY selling momentum by domestic investors may be slower for now. However, Japanese policymakers will likely announce more accommodative economic policies in Q2, both fiscal and monetary policies, which should improve risk sentiment among domestic investors." "Lower domestic yields would be gradually JPY negative too. We estimate there will be net selling of mid-term JPY flows in FY2016." "Speculative JPY positions are currently at their highest levels of net JPY buying in four years. The unwinding of JPY long positions and gradual JPY selling by domestic investors should restart USD/JPY appreciation, albeit at a slower pace to 122 by end-2016 (previously: 130)." For more information, read our latest forex news.