USD/JPY gets “Trumped” – DBS

USD/JPY plunged 1.4% to 156.20, its lowest close in six weeks, DBS senior FX strategist Philip Wee.

USD/JPY to decline to 150 by the end of 2024

“USD/JPY started retreating below 160 on July 11 after spending 11 days in a 160-162 range. Yesterday’s break below 158 (50-day moving average) opened the door towards 155.10 (100d MA). The yield carry trade against the JPY faces domestic and external risks.”

“Apart from suspected currency interventions by the Japanese government, Bank of Japan Governor Kazuo Ueda said last month that the central bank could raise interest rates again at its meeting on July 31. Tomorrow, consensus expects Japan’s National CPI inflation to rise a second month to 2.9% YoY in June from 2.8% in May, and excluding food, to 2.7% from 2.5%.”

“BOJ will likely announce a detailed plan to reduce its balance sheet. On the US front, the Fed is opening the door to start lowering US interest rates this year while leading US presidential candidate Donald Trump decried the JPY’s massive weakness. We maintain our forecast for USD/JPY to decline to 150 by the end of 2024 and 139 by December 2025.”