USD/JPY: The pair is supported by risk, the Fed and recovery policy: Danske Bank's short, medium and long-term forecasts

Danske Bank notes that the USD/JPY has risen significantly on the forex since Trump's victory in the US presidential election.

"In the short term, we believe that the USD/JPY will remain supported by improving risk sentiment and expectations of the Fed's rate hike in December, which is in line with our expectations. We raise our 1-month forecast of the USD/JPY to 113 (from 104) and 115 (from 106) within 3 months.

In the medium term, the chances of rising 10-year US rates and commodity prices have been reinforced by higher US inflation expectations, which should support the USD/JPY. We are now targeting a USD/JPY at 115 (106) within 6 months and at 115 (from 106) within 12 months.

In the long term, the risks are more balanced, but uncertainty is particularly high in view of the many factors that are unknown regarding the US economy under Trump's policy."