UBS Raises USD/JPY Forecast Due to Elevated Energy Prices and Monetary Policy Divergence

UBS has raised its USD/JPY forecast, citing persistently elevated energy prices as the primary catalyst. Japan's structural trade imbalances and widening monetary policy divergence between the Federal Reserve and the Bank of Japan are also contributing factors. The bank's analysts anticipate a stronger US dollar relative to the yen, as high energy prices widen Japan's trade deficit and create persistent selling pressure on the yen.