Danske Bank: USD/JPY will fall to 127 in three months

On April 20th, Danske Bank analysts believe that the dollar is overvalued against the yen and expects it to fall to 127.00 in the next three months. “USD/JPY appears to be overvalued fundamentally, coupled with our base case for monetary policy tightening over the summer; we expect the pair to fall to 127 over the next three months. However, after a relatively hawkish Fed In the near-term we may see some upside risks to the pair against the backdrop of dovish sentiment from the U.S. and the Bank of Japan.” “A rebound in global commodity prices poses an upside risk to USD/JPY as Japan is a net importer of energy. For whatever reason, rising U.S. Treasury yields continue to be a driver of USD/JPY.”