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

This forecast is based on the growing belief that the Bank of Japan may raise interest rates, which has contributed to the yen's recent strength.

UBS also expresses concerns about political stability in France, noting that any government censure could result in prolonged uncertainty.

This raises questions about the potential impact on foreign investment in French bonds, which has been a significant factor in the euro's recent resilience.

UBS suggests that the consequences 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 accommodative stance.