USD/JPY: We see less scope for Yen depreciation in the short-term – Goldman Sachs

As the USD/JPY pair fades recovery from an eight-month high, analysts at global investment banks like Goldman Sachs unveiled forecasts suggesting limited Yen appreciation in the short-term. In doing so, the quote also justifies the apparent US growth and no imminent exit from the Bank of Japan’s (BoJ) imminent exit from the Yield Curve Control (YCC) policy. That said, the US banker revised down its three-month and six-month price forecasts.

With this in mind, the GS stated, “While the BOJ's apparent flexibility on the current policy stance has shifted the balance of risks in favor of further Yen strength, the combination of no imminent exit from YCC and our more constructive view on US growth for 2023 relative to consensus fears of a recession should allow the Dollar to hold its ground against the Yen in the near-term.”

“Taken together, we see less scope for Yen depreciation in the short-term and have pulled forward the timing of appreciation,” adds Goldman.

The bank revises down three-month, six-month and 12-month forecasts to 132, 125 and 125 versus 136, 136 and 126 in that order.

Also read: USD/JPY declines towards 129.00 as USD Index looks to crack further ahead of US GDP