Usdjpy To Trade Lower Citi

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Usdjpy To Trade Lower Citi

Usd/Jpy To Trade Near 130.00

According to the latest forecast from Citi, USD/JPY will close in 2025 at around 130.00. According to Citi's strategists, the recent weakness in the Yen is mainly due to Japan's account deficit.

They also added that the Yen is expected to weaken in the medium term. This could drive the USD/JPY higher towards 150.00 by the end of 2024.

Yen To Strengthen In Medium-Long Term

However, the Yen's weakness will slowly fade and convert into a strength during 2025. That's why Citi believes that the USD/JPY will then decline below 140.00 during the first few months of 2025.

By the end of 2025, the USD/JPY will likely close near the 130.00 handle, which is thousands of pips away from the current trading levels.

As for what will reverse the weakness in the JPY, Citi has pointed out several reasons. For starters, the Yen will experience buying pressure as the Japanese firms will repatriate their foreign reserves.

With more foreign reserves in Japan, the only natural path for the Japanese Yen will be upwards. Additionally, the increased royalties and trade surplus have helped Japan improve its current account balance.

Citi has also challenged the long-term view that Japan's account deficit is a sign of structural weakness. According to them, this is nothing but a distorted story about the BoP of Japan. The rectification of this story could easily take several years.

And until this happens, the short JPY positions by the big firms will remain in force. However, there will be market forces that will work towards countering these positions.

Overall, Citi is bullish about the JPY but has also highlighted the need for caution in the short term. According to them, the financial balance and the portfolio investments will remain key for the USD/JPY movements. Also, any changes to the market flow and the conditions can also affect the USD/JPY as it remains very sensitive.

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