USD/JPY: Bearish stance, expect the cross at 125 in three months – Danske Bank

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BoJ tightening and valuation are expected to send USD/JPY to 125, in the view of economists at Danske Bank.

BoJ set to start to normalise monetary policy

“We look for USD/JPY to drop over the coming months on monetary tightening and valuation. We forecast USD/JPY at 125 in 3M.”

“The transition to a new monetary policy framework for the BoJ will likely be gradual starting with tweaks or an abandonment of the YCC during Q2.”

“The three largest risks for the JPY are i) sticky US inflation ii) Japanese inflation turns out to be transitory iii) rising commodity prices.”