USD/JPY finds support from carry trade, geopolitical risks, global inflation risk

Analysts at MUFG have accepted that the the yen is not about to skyrocket higher just yet.

MUFG say USD/JPY will find support from “the return to carry”. The carry trade has never really gone away. Yesterday yields on 2 year JGBs dipped back under zero %. Yep, carry is not dead yet.

On the Bank of Japan, MUFG says the risk of tightening to being long USD/JPY “looks limited for now. “


  • The escalation of geopolitical risks could also help support USD/JPY.
  • Higher crude oil prices are a Yen negative while increased global inflation risks may leave the Fed a little reluctant to push a dovish narrative, at least over the short-term as inflation risks could be seen to be rising.

USD/JPY update:

Mitsubishi UFJ Financial Group is the world’s second-largest bank holding company and second-largest public company in Japan.

This article was written by Eamonn Sheridan at Source