USD/JPY: Persistent Pressure on the Yen – Societe Generale Analysis

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about 5 hours ago

USD/JPY Dynamics

Societe Generale warns that the USD/JPY pair continues to test higher resistance, signaling sustained demand for dollars. A break above 152.00 could accelerate the move, echoing past interventions near 150.00. The pattern reflects a widening policy gap: the Fed stays restrictive while the BoJ eases away from ultra‑accommodative stance.

Fundamental Drivers

The primary engine is the interest‑rate differential, with US Treasury yields outpacing Japanese bonds, prompting capital outflows from Japan. Demographic headwinds and entrenched deflation dampen long‑term yen valuation. In a risk‑on climate, investors borrow low‑yielding yen for higher‑yielding assets, reinforcing the pressure.

Economic Impacts

A weaker yen boosts export competitiveness for firms like Toyota and Sony, lifting corporate profits and equity markets. Conversely, higher import costs for energy and food raise domestic inflation and strain households. Policymakers face a dilemma: support price stability without triggering further yen depreciation.