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USD/JPY in May had ranged from a low of 133.50 on the 4th to a high of 140.93 on the 30th. Economists at MUFG Bank discuss the pair’s outlook.
A return to the high of 142.25 on 22 November last year could be a temporary target. However, a break past this point would bring 145.00 into view, partly because there was a sharp decline at the time. We have therefore concluded that it is necessary to raise the upper limit of our forecast range.
USD/JPY is already overshooting if we consider only the difference in interest rates. The stance of the Japanese authorities also makes it hard to imagine that the yen will rise further and reach the 150 level again. Rather, we see the risk of a sharp decline in the USD/JPY going forward.
With a US rate cut still some time away, we, therefore, expect the BoJ will play a leading role in pushing down the USD/JPY over the next few months.
USD/JPY: Jun 2023 135~145 Jul-Sep 129~145 Oct-Dec 127~143 Jan-Mar 2024 125~141
Period-end forecast: Jun 2023 138 Jul-Sep 133 Oct-Dec 131 Jan-Mar 2024 129
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