Medium-Term Forex Outlook Analysis

This document is a technical report that outlines the medium-term outlook for foreign exchange rates, focusing specifically on the USD/JPY and EUR/USD currency pairs as of June 30, 2023. It describes how the USD/JPY has continued to rise, despite fluctuations in U.S. interest rates, and emphasizes that predicting JPY levels based solely on these rates is no longer feasible. The report details the factors contributing to JPY's depreciation, including speculative trading and actual demand pressures, and compares the current situation to the 'weak-yen bubble' period of 2005-07. It also discusses the ECB's ongoing rate hikes and their impact on the EUR's strength relative to the USD and JPY. The report includes a summary table of forecasts for USD/JPY and EUR/USD exchange rates, highlighting expected ranges for the upcoming quarters. Additionally, it notes potential risks, such as natural gas prices affecting the EUR, and the implications of continued Fed rate hikes on JPY's value.