USD/JPY Expected to Decline to 145.00 Area, Possibly 140.00 – ING

USD/JPY saw an uptick following the Bank of Japan’s (BoJ) anticipated rate hike. ING analysts assess the future trajectory of the pair.

Primarily a Dollar-driven Narrative

The prevailing perspective suggests that due to the substantial gap in interest rates between Japan and several other G10 central banks, the Yen will continue to serve as a funding currency amidst low volatility conditions.

Our primary outlook foresees USD/JPY potentially hovering around the 150.00-152.00 range, provided short-term US rates maintain stability. As these rates begin to decline in the upcoming months, USD/JPY is anticipated to retreat towards the 145.00 area and possibly approach 140.00 later in the year, especially as the Federal Reserve’s easing measures gain momentum (we anticipate 125 basis points of Fed cuts in 2024).

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