Economists at Crédit Agricole have revised their USD/JPY forecasts higher following Yen’s weakness in the second quarter.

Surprised by the JPY’s weakness during Q2

“The peak in the Fed Funds rate and the potential of the US economy falling into recession may put downward pressure on USD/JPY. High US rates also risk causing further difficulties for US regional banks, which may bring back a safe-haven bid for the JPY.”

“We are surprised by the JPY’s weakness during Q2. As a result, we revise higher our USD/JPY forecasts, adjusting the end-Q2 forecast from 128 to 134, and the end-2023 forecast from 122 to 128