The dollar-yen pair surged to 135.16 at one point, and has continued to rise to the highs for the first time in about 23 years and 8 months since October 1998. It has surpassed all major resistance points, and multiple strong buy signals are lit on all of the daily, weekly, and monthly candles.

From a technical point of view, it can be judged that the formation is extremely strong (after the high price update). Although it fell back, the upside was firm → The upward trend continued in the short and medium to long term → The next target is the October 1998 high of 136.90.

From a fundamental point of view:

(1) The US Fed’s hawkish stance tilt observation. The US Fed will continue to raise interest rates significantly after June and July FOMC, following June and July due to the recession of inflation peak out theory. Some FOMCs are scheduled for this week, and there is a rising view that interest rates will be raised by 75bp each at the next FOMC in July.

(2) The Fed’s continued hawkish stance. Governor Kuroda said yesterday made remarks that drastic USD/JPY movements made him wary of the depreciation of the yen, but also emphasized the continuation of monetary easing.

(3) Differences in the direction of US-Japan monetary policy against the background of above, Japan-US nominal interest rate differential will still influence to Buying dollars and selling yen.

(4) Differences in the direction of monetary policy between Japan and other countries not only the United States, but also the euro area, the United Kingdom, Canada, New Zealand, Australia, South Africa, Mexico, Chile, Poland, Malaysia, Peru, the Philippines, Hungary, South Korea, etc. We have materials reminiscent of dollar buying and yen selling, such as a shift to a monetary tightening stance → yen depreciation.

Based on the above, we continue to anticipate a rise in the dollar-yen as the main scenario Today, we will pay attention to the US May producer price index. If the result exceeds the market forecast, there is concern about US inflation → US long-term interest rate rise and it is possible that the dollar-yen pair will exert strong upward pressure to the next phycological miles stone of 136.900.

Today’s forecast range: 133.50-135.50

Analyst: Mr. Naoto Arase, Independent Analyst