SocGen: USD/JPY Set to Rise as BoJ–Fed Policy Gap Keeps Yen Under Pressure
Societe Generale warns that USD/JPY is likely to push higher as persistent policy divergence between the Federal Reserve and the Bank of Japan keeps sustained downward pressure on the Japanese yen. Technicals show USD/JPY testing higher resistance with shallower pullbacks, and a decisive break above 152.00 could accelerate gains. Primary drivers include a wide interest-rate differential—higher US Treasury yields versus low-yielding JGBs—Japan’s structural economic headwinds (aging population, deflationary forces), and current global risk sentiment favoring carry trades. Implications: exporters may benefit from a weaker yen while import-driven inflation and higher consumer costs present domestic risks. Traders should watch BoJ/Fed communications, the 152.00/150.00 levels, and moving averages (notably the 200-day) for breakout or reversal signals. Short-term: momentum favors USD strength; long-term: reversal would require meaningful narrowing of the policy gap or major risk-off shocks. Keywords: USD/JPY, Japanese yen, Bank of Japan, Federal Reserve, interest rate differential, forex trading.
Bearish
Societe Generale’s analysis points to a continued weakening of the yen driven by a clear, persistent interest-rate differential and supporting technical structure in USD/JPY (higher resistance tests, shallower pullbacks). Historically, periods where the Fed maintains higher rates while the BoJ remains comparatively dovish have coincided with sustained USD strength and yen depreciation. The note highlights specific trigger levels (150.00 psychological barrier; 152.00 for acceleration) and technical confirmations such as breaches of the 200-day moving average — all signals that encourage momentum-driven USD buying and yen selling in the near term. For traders: expect near-term bullish momentum in USD/JPY (yen bearish) until either (a) Fed signals cuts or (b) BoJ tightens more aggressively, or (c) a sudden global risk-off event renews safe-haven flows into the yen. In the long run, structural Japanese issues (demographics, deflationary pressure) and persistent capital outflows can keep baseline pressure on the yen, but policy shocks or coordinated intervention remain possible catalysts for rapid reversals — events that traders should monitor closely. Comparable episodes include past 2013–2015 and 2022–2024 stretches where policy divergence and yield gaps strongly correlated with yen weakness and episodic market interventions.