UBS predicts that the euro/yen exchange rate will decrease to 151 by the end of 2025 and further to 145 by the end of 2026.

This decline is attributed to the growing confidence in the Bank of Japan's ability to raise interest rates, which has led to the yen's recent outperformance.

However, UBS cautions that potential political instability in France, particularly if the government faces censure, could disrupt foreign investment flows into French bonds.

This investment is crucial for maintaining the strength of the euro.

The bank suggests that the consequences of such political uncertainty could be more significant and long-lasting than previously observed, especially considering the slowing growth and the European Central Bank's dovish stance.