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Investing.com — The Japanese yen has been on the rise of late, boosted by the dip in US Treasury yields, and Capital Economics expects it to rally further in 2025.<\/p>\n
At 10:20 ET (15:20 GMT), USD\/JPY<\/span> fell 0.4% to \u00a5155.74, trading not far away from its weakest level since Dec. 19.\u00a0\u00a0<\/p>\n \u201cOne of the key beneficiaries of the dip in US Treasury yields since the December US CPI print has been the yen,\u201d said analysts at Capital Economics, in a note dated Jan. 16.<\/p>\n \u201cThat\u2019s perhaps not surprising — the rise in Treasury yields, which had far outpaced that of JGB<\/span> yields, had been a key driver of the recent pressure on that currency.\u201d<\/p>\n Some hawkish comments by Bank of Japan officials, including Governor Ueda and Deputy Governor Himino, as well as media leaks seemingly confirming that the central bank will hike next Friday, have probably helped the yen too.<\/p>\n The Japanese currency is still very weak against the dollar, but with US Treasury yields perhaps turning around a corner, could we be at the start of a renewed yen rally?<\/p>\n Capital Economics has doubts.<\/p>\n \u201cWe suspect that huge gains, such as those we saw in mid-2204, aren\u2019t on the cards this time around,\u201d Capital Economics said, adding that two of the key factors that fuelled that rally don\u2019t seem to be present now.<\/p>\n For one, although the group thinks Treasury yields will fall, it doesn\u2019t expect them to fall particularly far.<\/p>\n \u201cThe Fed seems to be almost done with its easing cycle: we think it will cut by another 50 bps, of which 40 bps seems already priced in. That, on its own, probably wouldn\u2019t give the yen a huge boost,\u201d Capital Economics said.<\/p>\n