What are USD to JPY forecasts?
The US Dollar (USD) has experienced modest gains recently as a result of heightened economic tensions between the United States and China, which increased the appeal of the safe-haven currency. Furthermore, FX analysts expect that the upcoming PMIs from S&P Global could potentially drive down USD demand due to a forecasted weaker services reading and a stall in factory activity. Despite this, economists predict that the strength of the US dollar will reverse in 2023 as the Fed's interest rate hikes cycle comes to an end.
The Japanese Yen (JPY), on the other hand, has shown more volatility lately following the Bank of Japan's (BoJ) decision to leave interest rates unchanged. This has caused JPY to lose ground against the USD, with USD/JPY moving from around ¥133 at the start of April to ¥136.30 at the end of the month. For the month of May, the USD/JPY is expected to trade between ¥129.70 and ¥139.70. The market view identifies three main factors that impact the USD/JPY exchange rate: the widening of the US-Japan interest-rate gap, changes to global oil prices, and the yen's safe-haven status. The USD/JPY currently sits at 90-day highs near 140.3, which is 4.2% above its 3-month average of 134.7, having traded in a relatively stable 7.4% range from 130.6 to 140.3.