Societe Generale Flags Rangebound USD/JPY Amid External Market Forces

The Japanese yen's potential for strength has been hindered by its failure to respond to improving yield environment, according to Societe Generale.

The bank notes that despite long-term Japanese government bond yields rising to levels not seen in over a decade, the yen remains stuck within a trading range of roughly 155 to 160 against the US dollar.

This stagnation is attributed to external factors such as the resilience of the US economy and the Federal Reserve's cautious approach to rate cuts, which continues to support the dollar.

Societe Generale emphasizes that without a significant shift in interest rates, either through a more hawkish Bank of Japan or a more dovish Fed, USD/JPY is likely to remain rangebound.