The USD/JPY reached the 109 level earlier than our bullish forecast saw. We view the solid US economy and the outlook for higher US interest rates as the main macro-drivers behind the USD/JPY uptrend. Arguments that the USD/JPY will not rise significantly because there is limited room to raise US interest rates, the BoJ has yet to implement additional easing, and the Japanese economy will suffer if the yen depreciates further are quickly losing their validity under current conditions.
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