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Commerzbank expects gradual yen appreciation toward mid-2020s levels

Commerzbank revised its near term view to a slightly weaker yen, but still forecasts USD/JPY falling to 145 and EUR/JPY dropping to 175 by end-2027.

Reported · Written up by our desk · Major Pairs

Commerzbank’s Volkmar Baur said the Japanese yen remains historically weak, citing USD/JPY above 162 and EUR/JPY near 186. Even so, the bank expects gradual yen appreciation over the coming quarters, while acknowledging that conditions supporting weakness may persist for some time.

The bank has adjusted its outlook to call for a slightly weaker yen in the near term. Over the medium term, it forecasts USD/JPY falling toward 145 and EUR/JPY toward 175 by the end of 2027 as fundamentals and rate differentials improve.

Baur argued that economic developments should support a stronger yen, even though markets have not yet reflected that view. He added that a shift in sentiment could take place over the coming weeks.

On US policy expectations, Commerzbank said it does not expect the Fed to raise its benchmark interest rate this year, despite pricing that implies otherwise. Looking to next year, it continues to anticipate Fed interest rate cuts, which it said would weigh on the US dollar over the coming months.

Latest closeUSD/JPY 162.90 ▲0.3%

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