According to Eurizon SLJ Capital, the narrowing of interest spreads may be one of the potential triggers for the weakening of the USD/JPY exchange rate. “The risk bias for the next 12 months is that the Bank of Japan will raise interest rates faster, and the Federal Reserve will cut interest rates faster,” Stephen Jen and Joana Freire wrote in the report. We believe that the current scale of Japanese yen arbitrage transactions is huge, and the risk of Japanese yen arbitrage trading suddenly being closed should not be underestimated. Eurizon's “conservative target price” for this currency pair over the next 2-3 years is 125.

According to Eurizon SLJ Capital, the narrowing of interest spreads may be one of the potential triggers for the weakening of the USD/JPY exchange rate. “The risk bias for the next 12 months is that the Bank of Japan will raise interest rates faster, and the Federal Reserve will cut interest rates faster,” Stephen Jen and Joana Freire wrote in the report. We believe that the current scale of Japanese yen arbitrage transactions is huge, and the risk of Japanese yen arbitrage trading suddenly being closed should not be underestimated. Eurizon's “conservative target price” for this currency pair over the next 2-3 years is 125.