This is an excerpt from our full USD/JPY 2024 Outlook report, one of nine detailed reports about what to expect in the coming year. Click the banner at the bottom to download the full report.
USD/JPY 2024 outlook
Looking at the momentum in the US economy, and how rapidly financial conditions are turning accommodative, directional risks for US-Japan yield spreads over the next year maybe skewing higher, regardless of whether the BOJ manages to normalise. And while that may challenge US asset valuations and spark carry trade unwinds, that would likely require negative spillover effects to regions where the growth outlook is considerably more challenged to eventuate.
As such, it suggests much of the correction in USD/JPY may have already taken place with the rapid recalibration in the US rate outlook. The overall bias remains lower in the year ahead, albeit not substantially so. Think the mid to high 130s for a year-end forecast, unless we see a hard landing which could see the pair return to pre-pandemic levels.
140.80 is the first downside level to watch, especially given the proximity of the 50-week moving average that was respected on several occasions this year. Below, 137.70 has acted as support and resistance for well over 12 months with 134.00 the next level under that. On the topside, USD/JPY may struggle to advance much past 145.00 unless the higher for longer narrative resurfaces again.
Source: TradingView, StoneX
What are the major fundamental storylines for USD/JPY traders to watch next year? What about the impact of BOJ and Fed monetary policy? See our full guide to explore these themes and more!
