In a note published by the Japanese investment bank of Mitsubishi UFJ Financial Group on Thursday, the bank’s analysts made it clear that they expect the USD/JPY pair to fall below the 140-yen level by the end of 2025.
The bank noted in the note that the interest rate differential between the US Federal Reserve and the Bank of Japan is likely to narrow further as the United States moves towards cutting interest rates at the same time as the Japan Bank moves to raise interest rates.
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MUFG expects the US Federal Reserve to raise interest rates to a range of 3.75% to 4% by late 2025, while institutional economists expect the Japan Bank to raise its interest rate target to 0.75% by the fourth quarter of the year.
On the trading front, the USD/JPY pair rose during the European period of the forex market today by about 0.25% to 145.62 yen, rebounding from its lowest level in two weeks since August 7.
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