USD/JPY has dropped by JPY 7-8 from JPY120 to JPY112-113 so far in 1Q as seasonal factors exports and cash repatriation have supported the JPY appreciation, shifting the direction of USD/JPY from the JPY depreciation, notes Btmu.

"Exporters will likely sell USD/JPY to cover their real demand ahead of the Fiscal year-end. Foreign asset buying by Japanese investors always pick up early in the next fiscal year, so should be watched.

At this stage, yield gaps among key currencies may not be enough to whet risk appetite amongst Japanese large scale investors, many of whom may buy overseas assets with currency hedges. At the BoJ board, Makoto Sakurai will likely start work on 1st April, and his views should be watched.

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The recent USD/JPY range may remain intact next week despite US and Japanese data releases," BTMU argues.