USD/JPY: Heading for 140 in the short term, then to decline – MUFG – by MSalordFX USDJPY Currencies Banks
to end the third quarter at 135 and the year at 131.00. However, in the short-term they see the pair likely to rise to 140. “The dollar strengthened across the board as the Fed turned hawkish in response to an unexpected pickup in inflation, while the yen weakened due the divergence inin Japan and other countries. The USD/JPY rose to touch 137, with 140 now in view given the Fed's unwaveringly hawkish stance should keep the dollar strong in the near term.
“The interest rate differential in the intermediate sector, which tends to reflect the near-term outlook for monetary policy, has driven the USD/JPY higher since last year. The current level already looks strained, but we expect a narrowing of interest rate differentials would weigh on the USD/JPY if expectations of a decline US interest rates in anticipation of changes in the US economy becomes the mainstream view.” to stop the yen from weakening will come into view if the USD/JPY passes 140.
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