USD/JPY: Yen selling unlikely to persist – MUFG

FXStreet Insights Team FXStreet

Economists at MUFG Bank analyze Japanese Yen (JPY) outlook after the Bank of Japan (BoJ) policy announcement.

Will Yen selling persist after BoJ policy changes?

We see limits to the extent of Yen selling that can take place from here. Of course, there are greater USD/JPY upside risks over the very short term given this risk event has now passed without any major hawkish surprise and if the FOMC on Wednesday were to drop a DOT in its policy rate profile, US yields will likely jump further and potentially drag USD/JPY to intervention levels.

But over the medium term, we view today’s announcements as hugely significant that is consistent with higher yields and a stronger Yen.

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