USDJPY SIGNAL 04-04-22 : USDJPY Yen negative fundamentals to persist but a decline in US yields later will weigh on the pair – MUFG.

USDJPY SIGNAL : The dollar advance versus the yen in March was the largest since November 2016 when Donald Trump won the US election. Economists at MUFG Bank forecast further upside for USDJPY before the yen recovers.

MoF a distance away from any actual intervention.

USDJPY SIGNAL : We see the fundamental drivers that fuelled yen selling remaining over the coming months which could see new highs in USD/JPY before any recovery of the yen takes place.

While the US short-term yields are now richly priced for rate hikes, the FOMC hiking by 50bps in May and possibly again in June will help support front-end yields in Q2. Secondly, we expect crude oil prices to advance notably in Q2 with physical shortage of oil driving up the spot price. That will have a further negative impact on Japan’s trade balance. Thirdly, inflation expectations in Japan are elevated at level last seen in 2015 when USD/JPY was last trading above 120.00 and the BoJ’s monetary stance is likely to remain ultra-dovish.

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