UBS adjusted its forecast for the currency pair, citing the strength of the US dollar as a key factor. The firm raised its quarter-end forecasts for the pair to 155 yen for June 2024, and then to 152, 148 and 145 yen for subsequent quarters through March 2025. Previous forecasts were set at 148, 145 yen, yen. 143 and 141 yen respectively.
The revision occurs as the market adjusts its expectations for Federal Reserve rate cuts, which have been cut significantly. In addition, UBS noted that short positions in the yen have reached extreme levels. These market dynamics have contributed to the expected shift in the USD/JPY pair due to the sustained strength of the US dollar.
UBS also provided guidance to investors who had previously shorted USD/JPY, suggesting that those who took positions expecting the pair’s upside exposure at levels between 150-152 yen should consider converting at these initial levels. Following this conversion, investors might consider opening additional positions.
The firm’s updated forecast reflects the belief that while 155 yen is not an absolute threshold, it is a level that is determined by current market trends, including the recalibration of interest rate expectations and the positioning of the yen. This guide aims to help investors navigate the foreign exchange markets in this changing environment.
The new targets set by UBS for the USD/JPY currency pair reflect the firm’s analysis of economic performance and market sentiment at the time of the forecast. Investors and market watchers typically monitor such forecasts from major financial institutions to form their trading strategies and expectations regarding currency movements.
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The revised UBS forecast for the USD/JPY currency pair is confirmed by the stable dynamics of the US dollar. To provide broader context to the dollar’s recent strength, InvestingPro data shows a consistent upward trend in the value of the dollar. Over the past year, the dollar’s overall price return has been 4.16%, with a notable year-to-date increase of 4.62%. These figures reflect the currency’s strong position in the market.
Additionally, the dollar’s previous closing price was US$106.08, bolstering the currency’s strong performance. This data is consistent with UBS’s assessment, which could influence currency traders to take the firm’s recommendations on USD/JPY positions into account.
InvestingPro Tips advises investors to monitor the Federal Reserve’s interest rate decisions and market positioning as these factors can significantly impact the movements of currency pairs. For those looking for more in-depth analysis, InvestingPro offers additional tips for currency traders. To improve your trading strategy with this information, consider subscribing to InvestingPro. Use coupon code PRONEWS24 to receive an additional 10% discount on annual or biennial Pro and Pro+ subscriptions, plus access to the full list of 15+ InvestingPro tips that can further impact your investment decisions.
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