Rabobank strategists say the yen’s recovery requires a hawkish BoJ stance and reduced Fed rate hike fears to hit a USD/JPY 159 target.
The Japanese yen’s trajectory against the US dollar remains clouded by Federal Reserve policy uncertainty, with Rabobank noting Fed Chair Warsh’s forward guidance stance as a key risk. Recent JPY weakness persists, and the Bank of Japan’s cautious hiking pace may not suffice to reverse the trend without clearer hawkish signals.
Market expectations for the Fed’s upcoming meeting show divergence, with economists predicting no policy change but pricing reflecting jittery sentiment on potential hikes. The BoJ’s Friday decision, informed by the Fed’s outcome, could face outsized USD/JPY impact, as yen softness this year suggests further upside pressure without a hawkish pivot.
Rabobank’s three-month USD/JPY target of 159 depends on the BoJ accelerating rate hikes, a possibility Bloomberg reported last week. Analysts warn that absent clear hawkish signals, the yen risks further depreciation against the dollar.