USD/JPY continues to push higher and trades at its strongest level since June 2015 above 125.50. Economists at MUFG Bank think the pair could climb as high as the 130 level.

Yen weakness attracts attention as USD/JPY approaches 2015 high

“USD/JPY trades within touching distance of the June 2015 high at 125.86. There is a clear risk in the near-term that yen weakness will accelerate when USD/JPY finally breaks through the previous cycle high and then moves quickly towards the 130.00-level which could trigger more concern from Japanese policymakers.”

“It remains difficult to dampen USD/JPY upside right now with the divergence between Fed and BoJ policies continuing to widen. Market participants would have to become much more fearful over a sharper slowdown in global growth to trigger a significant reversal of yen weakness given that an imminent tightening of BoJ policy is unlikely.”