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Analysts at Danske Bank see the USD/JPY pair at 102 in one month, at 101 in three months, at 100 in six and at 100 in a year. They point out the US dollar has faced strong headwinds on fading global risks, rising US inflation expectations and brightening global growth.

Key Quotes: 

“We have witnessed a theme of Asian outperformance given the region’s fast recovery from the COVID-19 pandemic, relatively supportive Chinese credit growth and, not least, Asian equities doing well. For Asia in general, and specifically for countries with proximity to China, the lack of being commodity exporters, stable political regimes, strong productivity and low debt are a boon for a rebound in FX.”

“We keep our expectations for further JPY strength on the back of the global theme of broad USD weakness and a strong regional anchor in CNH. We believe it is likely we need to see USD/CNH higher to take USD/JPY higher too.”