USD/JPY set to return to 130-135 in 2H24 – SocGen

A return to USD/JPY 130 is possible by the end of 2024, economists at Société Générale report. 

EUR/JPY and CHF/JPY have considerable room to fall in 2024

In the absence of fresh terms of trade shock, and with the help of falling US Treasury yields, the Yen should make substantial gains in 2024. A back-of-the-envelope regression of USD/JPY and the yield gap, coupled with our yield forecasts, point to a return to USD/JPY 130-135 in 2H24. 

Given the Yen’s sensitivity to long-term yields, how much it has fallen relative to the Euro, and how much bad news is ‘in the price’ for the North Asian currencies, EUR/JPY and indeed (in a less scary world) CHF/JPY have considerable room to fall in 2024.