FXStreet reports that in the view of economists at MUFG Bank, the USD/JPY could well rise further to 115-116.
“The USD/JPY looks set to rise further given that commodity prices are likely to keep climbing. We expect it could rise to 116 within the year based on the deviation from purchasing power parity. Tight dollar supply/demand through to the end of the year is also likely to keep the dollar steady.”
“We expect inflation expectations to stop rising in 2022 and forecast the USD/JPY will return to 110-111, the kick-off point for the current phase of increase, at end-FY21 (end-March 2022).”
“We have raised the overall level of our forecasts to reflect the higher starting point, but maintain our previous forecast that the USD/JPY will gradually soften in 2022 because we expect the dollar to face pressure to correct from overvalued levels and the yen to recover as inflation expectations decline.”