Analysts at Danske Bank forecast the USD/JPY pair at 113 in one month, 112 in three months, 111 in six and 109 in 12 months. They warn that a significant change in risk sentiment could take USD/JPY quicker towards 100. 

Key Quotes: 

“Upside risks to USD/JPY primarily comes from the global economy moving back in reflation mode if COVID-19 and labour market issues are solved and growth beats expectations. Significant change in risk sentiment causing US yields and commodities to decrease significantly could take USD/JPY quicker towards 100.”

“USD/JPY has moved higher driven by particularly higher US yields. Increasing inflation and strong growth on a global scale has been a fruitful environment for USD/JPY but factories have reached production limits on a global scale while goods demand continues to be strong. We see an increasing risk that central banks are forced to tighten significantly to bring demand down while fiscal stimulus wanes, which will move the global economy in to a period with slower growth and less inflation. That will result in flatter yield curves and less pressure on commodity prices including oil. If we add that speculators are still stretched short JPY, although to a smaller extent, it leaves USD/JPY more sensitive to downbeat economic news.”