USD/JPY forecasts change all the time, affected by news events and relative sentiment towards the US and Japanese economies and this exchange rate is even more volatile than usual because of the uncertainties around the war in Ukraine.
BER Research The Japanese yen has bounced back from record lows as we approach the end of the year. USD/JPY hit 150 in mid October — a more than 32-year low for the yen — prompting the Bank of Japan to intervene to support the struggling yen.
The yen has jumped more than 13 per cent since late October, when expectations that the US central bank will continue to aggressively raise borrowing costs sent the yen sinking to its lowest level since 1990.
| Date | USD/JPY | Change | Period |
|---|---|---|---|
17 Jan 2023 | 128.29 | 1.4% ▲ | 2 Week |
02 Nov 2022 | 147.89 | 12.1% ▼ | 3 Month |
31 Jan 2022 | 115.12 | 13% ▲ | 1 Year |
01 Feb 2018 | 109.40 | 18.9% ▲ | 5 Year |
02 Feb 2013 | 92.45 | 40.7% ▲ | 10 Year |
05 Feb 2003 | 119.73 | 8.6% ▲ | 20 Year |
Economists expect the US dollar’s strength over the past year to reverse in 2023 as the Fed’s interest rate hikes cycle to an end.
A clear reflection of this is that the US Dollar index (measure of the USD strength against basket of currencies) which has pulled back from 20 year highs.
In 2022 the Bank of Japan resisted the global wave of monetary tightening keeping interest rates unchanged.
The yen, as a result, lost considerable ground against the U.S. Dollar. For reference, in January USD/JPY was around 115 and in October was trading around 150 — a 32-year LOW for the yen.
However, in December the USD/JPY rate has dropped back to the 130s due more to USD weakness than any yen strength.
Yen volatility in 2022 against the greenback stemmed from the interest rate differentials between Japan and the US. Market expectations were that the Fed Reserve would continue to hike rates aggressively, while the BOJ was committed to low interest rates.
The USD to JPY currency pair generally goes up whenever there is overall Dollar strength and markets are a risk-on stance.
The foreign exchange market convention for USD/JPY is to quote Japanese yen as Yen per US dollar. Thus a higher USD/JPY rate actually means one yen is worth less, that is you can buy more yen for 1 USD.
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You can read about other USD exchange rate forecasts here US Dollar Trends and Forecasts.
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