BofA remains long on EUR/JPY amid USD weakness concerns By Investing.com

Investing.com -- Analysts from Bank of America (BofA) expressed their outlook on the Japanese yen, indicating that they do not expect it to be a major beneficiary of potential U.S. dollar weakness in 2025. The analysts highlighted several factors contributing to this view.

The potential increase in the U.S. dollar hedge ratio among Japanese institutions is expected to be gradual and marginal. BofA analysts also pointed out that structural outflows are likely to persist, which could impact the yen’s performance.

Additionally, the analysts noted that unstable political conditions in Japan may weigh on the yen. They referenced the "Japan Rates and FX Watch: Yen’s summer risk" report dated May 14, 2025, which elaborates on these political uncertainties.

Furthermore, BofA analysts suggested that the USD/JPY carry is unlikely to decline, reinforcing their position. They remain long on the EUR/JPY and AUD/JPY currency pairs, as mentioned in their "Liquid Insight: Case for a higher EUR/JPY" report from April 22, 2025.

This outlook from BofA provides insight into their strategic positioning and expectations for the Japanese yen and related currency pairs in the coming year.

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