Summary
The USD/JPY is facing topside resistance and intervention concerns just below 160. However, we expect yen-selling pressure to increase if the Strait of Hormuz reopens as Middle East tensions ease, given that the resumption of energy imports would generate real-demand yen selling. The BOJ is also likely to consider a rate hike at its June meeting as higher import prices accelerate domestic inflation. The FOMC is expected to stay on hold for now, but further dollar weakness is likely to be limited depending on developments in the Middle East and inflation trends.