Barclays: Retail buyers likely drove the latest leg of the rally
Investing.com - The Japanese yen strengthened against the U.S. dollar following Japan’s upper house election, with the USD/JPY exchange rate pulling back to mid-147 levels, according to UBS analysis released Monday.
The currency saw what UBS described as a "relief recovery" after the ruling coalition avoided a major electoral defeat that could have increased the likelihood of a consumption tax cut and potentially worsened Japan’s fiscal position.
UBS identified several upcoming catalysts that could influence the exchange rate, including U.S.-Japan trade negotiations, developments regarding Federal Reserve Chair Jerome Powell’s successor, and political uncertainty surrounding Japanese Prime Minister Shigeru Ishiba’s position and potential replacement.
The financial services firm maintained its USD/JPY forecast of 140 by year-end 2025 and 136 by June 2026, suggesting continued yen appreciation against the dollar over the coming months.
UBS recommended investors sell USD/JPY on rallies and sell USD/JPY upside risk at levels of 149 and above to capture yield advantages, indicating a bearish outlook on the dollar versus the Japanese currency.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.