FXStreet (Edinburgh) - In the view of Morten Helt, Senior Analyst at Danske Bank, spot could reach the critical 130 handle backed by the divergence in monetary policy between the Fed and the BoJ. Key Quotes “We have brought forward additional USD/JPY appreciation as the first rate hike from the Fed is moving closer”. “We now target the cross at 125 (previously 123) in 1M and 128 (125) in 3M”. “Following a possible rally around the first Fed hike, we expect USD/JPY to enter another period of range trading. We have raised our 6M and 12M forecast to 130 from 126 and 127, respectively, as a general depreciation among Asian currencies should leave room for more USD/JPY upside”. “While USD/JPY is expected to remain supported by higher US interest rates we expect the cross to be trendless and more volatile in the medium term as stretched valuations in PPP and real effective terms are likely to curb upside potential”. For more information, read our latest forex news.