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- USD/JPY to drop below 130 on a 6-12M horizon – Danske Bank
USD/JPY to drop below 130 on a 6-12M horizon – Danske Bank
The JPY has suffered not only from a dovish Bank of Japan but also from the general rise in global yields. This has lifted USD/JPY to new year highs. Economists at Danske Bank analyze the pair’s outlook.
USD/JPY seems fundamentally overvalued
We think the USD/JPY seems fundamentally overvalued and combined with potential monetary policy tightening; we expect the cross to drop below 130 on a 6-12M horizon.
We think the BoJ still is underestimating inflationary pressures in Japan, and the persistence of underlying inflation will continue to build pressure on BoJ’s ultra-dovish stance.
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