USDJPY rose for a third consecutive day since May 9, and traded above 80 yen for the first time since May 4.
Yen is expected to weaken especially against the dollar, by the end of this year as per Deutsche Bank.
Chief of FX strategy at Deutsche Bank said that the bank has abandoned its bullish stance on the yen and is changing its strategy it has held since the onset of the 2008 financial crisis. It revised its forecast to show a turn in the medium term trend in USDJPY to 90 yen by the end of 2013.
Deutsche Bank noted that the Bank of Japan has increased the number of interventions in the currency markets, with record interventions in 2011 and has signalled further interventions are possible if necessary to curb yen strength.
Meanwhile, another reason to curb yen strength is that its rise has had a server impact on Japan’s trade balance. This has resulted in a deteriorating terms of trade, suggesting the yen is currently over valued and would likely weaken to reach its real equilibrium value.
Further adding to dollar strength against yen would be the prospects of US monetary policy , if the Federal Reserve reduces its willingness to increase its balance sheet, this supports the USDJPY.