USD/JPY set to decline toward 125 over the coming months – Danske Bank

The Yen saw a boost from the BoJ initiating the beginning of the end to its Yield-Curve-Control. Economists at Danske Bank expect the USD/JPY pair to edge lower towards the 125 over the coming months.

Tightening cycle commencing

“Japanese monetary policy has taken over as a key driver of USD/JPY, while global inflation, bond yields and commodity prices are still important to watch.”

“We look for a stronger JPY to come as Bank of Japan tightens monetary policy and the tightening cycle concludes in the US and Europe.”

“We now forecast USD/JPY at 128 (1M), 125 (3M), 125 (6M) and 125 (12M).”