USD/JPY: YEN WEAKNESS CAN REMAIN FOR LONGER – MUFG
The biggest mover amongst G10 currencies at the start of this year has been the Japanese Yen (JPY). USD/JPY higher for longer? Economists at MUFG Bank analyze the pair’s outlook.
Carry-seeking market participants likely see value in long USD/JPY
The return to carry will help support USD/JPY.
The BoJ risk to that trade looks limited for now. The escalation of geopolitical risks could also help support USD/JPY.
Higher crude oil prices are a Yen negative while increased global inflation risks may leave the Fed a little reluctant to push a dovish narrative, at least over the short-term as inflation risks could be seen to be rising.
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