Forex Flash: Downside risks on JPY are increasing - UBS

The UBS analyst team notes that USD/JPY consolidated after reaching a fresh 3 ½-year high, sparked by a statement that BOJ governor-elect Kuroda might already hold a central bank meeting in March, instead of waiting until the scheduled April meeting. "Expectations increased that he might announce new easing measures".

"This is JPY negative in the medium term, but markets used the negative news to liquidate part of extensive short positions and the JPY traded stronger", UBS says. "Key event is the upper house vote on BoJ Governors on March 15".