UBS predicts that the euro will weaken against the yen, with the euro/yen pair expected to reach 151 by the end of 2025 and 145 by the end of 2026.

This forecast is based on the belief that the Bank of Japan will be able to raise interest rates, which has contributed to the recent strength of the yen.

However, UBS warns that political instability in France could pose risks to foreign investment in French bonds, which has been a key factor in the euro's resilience.

The bank highlights that the impact of such political developments could be more significant and long-lasting than previously observed, especially considering the slowdown in growth and the European Central Bank's cautious stance.