USD/JPY has continued its move higher as the global pressure for higher yields and the global energy crunch has weighed on the yen. But economists at Danske Bank expect the pair to turn back lower over the coming months.

JPY headwinds remain in place

“The key driver of USD/JPY remains the outlook for the global economy and US treasury yields.”

“With the US labour market still in shape, we are not convinced global inflation pressures are yet turning and thus, in the short run, JPY headwinds will probably remain in place. Looking further ahead, we do expect the pressure on JPY will wear off.”

“We forecast the cross at 142 (1M), 142 (3M), 142 (6M), 130 (12M).”