USD/JPY could see further notable declines into the high 120’s – MUFG

USD/JPY plunged by over 4% on Tuesday, the largest drop since October 1998. Economists at MUFG Bank believe that the pair could extend its slide to the high 120’s. 

JPY is now the top performing G10 currency since 21st October 

“Governor Kuroda was expressing reservations about the sustainability of the pick-up in inflation, predicting it would fall back next year.” 

“The Yen has gained 15% versus the dollar since the close on 20th October and will if sustained act as a powerful disinflationary force next year. It will certainly help protect Japan more from global energy price inflation.”

“The Yen is likely to remain under upward pressure and positioning liquidation risks as year-end approaches could see further notable declines in USD/JPY into the high 120’s.”