UBS updated its forecast for the currency pair, citing the strength of the US dollar as a key factor. The company raised its quarterly forecasts for the pair to ¥155 for June 2024, followed by ¥152, ¥148 and ¥145 for subsequent quarters through March 2025. The previous forecasts were set at ¥148, ¥145, ¥143 and ¥141, respectively.
The revision comes as the market adjusts its expectations for Federal Reserve rate cuts, which have been significantly scaled back. Furthermore, UBS noted that short positions in the yen have reached extreme levels. These market dynamics have contributed to the perceived dislocation of the USD/JPY pair due to the robust performance of the US dollar.
UBS also provided guidance for investors who had previously sold USD/JPY, suggesting that those who took positions anticipating upside risk to the pair at levels between ¥150 and ¥152 should consider converting back to these initial levels . Following this conversion, investors could then consider taking additional positions.
The company’s updated forecast reflects the belief that while ¥155 is not an absolute threshold, it is a level based on current market trends, including the recalibration of interest rate expectations and positioning in the yen. These guidelines are intended to help investors navigate the currency markets in these changing conditions.
The new targets set by UBS for the USD/JPY currency pair are indicative of the company’s analysis of economic indicators and market sentiment at the time of the forecast. Investors and market watchers typically follow such forecasts from major financial institutions to inform their trading strategies and expectations for currency movements.
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InvestingPro Insights
UBS’s revised forecast for the USD/JPY currency pair is underlined by the robust performance of the US dollar. To provide broader context on the dollar’s recent strength, InvestingPro data shows a consistent upward trend in the dollar’s value. Over the past year, the dollar has achieved a total price return of 4.16%, with a notable increase of 4.62% since the beginning of the year. These figures reflect the coin’s strong position in the market.
Furthermore, the previous closing rate of the dollar was reported at USD 106.08, reinforcing the currency’s solid performance. This data is consistent with UBS’s assessment, which could influence currency traders to consider the company’s advice on the USD/JPY positions.
InvestingPro Tips suggests that investors should keep an eye on the Federal Reserve’s interest rate decisions and market positioning as these factors can significantly influence the movements of currency pairs. For those looking for a more in-depth analysis, InvestingPro offers additional tips for currency traders. To improve your trading strategy with these insights, consider subscribing to InvestingPro. Use the coupon code PRONEWS24 to get an additional 10% off an annual or biennial Pro and Pro+ subscription, and access the full list of 15+ InvestingPro tips that can further inform your investing decisions.
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