USD/JPY: Yield differentials to be a tailwind for the Yen during the year – Danske Bank

FXStreet Insights Team FXStreet

Economists at Danske Bank view narrowing rate differentials between Japan and the G10 to favour the Japanese Yen (JPY) over the course of this year.

USD/JPY to steadily decline below 140.00 on a 12M horizon

We forecast USD/JPY to steadily decline below 140.00 on a 12M horizon. This is primarily because we expect limited upside to US yields from here. Hence, we expect yield differentials to be a tailwind for the JPY during the year, as G10 central banks, except the BoJ, are likely to commence rate-cutting cycles.

In addition, historical data suggests that a global environment characterized by declining growth and inflation tends to favour the JPY.

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FXStreet Insights Team

FXStreet

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