UBS has updated its forecasts for USD/JPY rates, predicting that they will reach 155.00, 152.00, 150.00, and 147.00 by December 2024, March 2025, June 2025, and September 2025, respectively.
The new estimates are higher than the previous ones, which were 147.00, 143.00, 140.00, and 138.00. UBS has also set a target of 145.00 for December 2025.
The investment note suggests that there could be a short-term increase in USD/JPY to the range of 158.00-160.00 if 10-year yields rise by 30-40 basis points to 4.8%. However, UBS believes that this spike will likely be temporary and expects a reversal in the medium term.
The report mentions that President-elect Donald Trump has criticized the Japanese yen for its weakness in the past, and Japanese policymakers are cautious about allowing the yen to weaken beyond 160.00. The note suggests that a stronger yen could be beneficial for both the U.S. and Japan.