[Exchange] Considering the scenario of "Rising Crude Oil Prices = Weak Yen" | Yoshida Taka's Forex Daily | Moneyクリ Money's media for investment information and financial assistance from Monex Securities.

The limit from the 52-week MA may be around 150 yen due to the weak yen.

The USD/JPY fell to 139 yen by April, significantly breaking below the 52-week MA (moving average) (see Chart 1). This empirically suggests that there is a high likelihood of a multi-year downward trend in USD/JPY.

[Figure 1] USD/JPY and 52-week MA (2000 - ) Source: Created by Monex Securities from Refinitiv data If the above is true, a temporary rise that goes against the trend will generally be limited to around the 52-week MA, even if it expands to the fullest. The 52-week MA is currently around 150 yen, so if the rise in crude oil due to Middle Eastern uncertainties leads to a stronger US dollar and a weaker yen, it seems that the limit will also be around 150 yen.

A rise in WTI is necessary for the yen to weaken to 150 yen per 100 US dollars.

Next, let's take a look at the relationship between crude oil prices and the USD/JPY. Following Israel's bombing of Iran, crude oil prices have risen significantly. Considering the relationship with the strengthening of the US dollar and the weakening of the yen, for the USD to rise to around 150 yen as mentioned above, WTI (West Texas Intermediate) seems to need to rise further to target 100 US dollars (see Figure 2). So, will the rise of WTI to 100 US dollars happen this time?

[Figure 2] USD/JPY and WTI (May 2025 onwards) Source: Created by Monex Securities from Refinitiv data The 90-day MA of WTI is currently around $65.4. Therefore, if WTI rises to $100, the deviation rate from the 90-day MA is expected to expand to over 50%. The only time the deviation rate of WTI's 90-day MA expanded to over 50% since 2010 was in March 2022, triggered by Russia's invasion of Ukraine (see Chart 3).

[Figure 3] WTI 90-Day MA Divergence Rate (2010 - ) Source: Created by Monex Securities based on data from Refinitiv.

WTI rise up to $100 is an extreme "overbought" phase of the Ukraine invasion.

Let’s整理 the information up to this point. For the USD/JPY to rise to 150 yen, it is necessary for WTI to aim for 100 US dollars. The rise of WTI to 100 US dollars means that, based on the 90-day MA divergence rate, a reoccurrence of the extreme short-term "overbought" situation triggered by Russia's invasion of Ukraine in March 2022 is required.

Considering the supply risks of crude oil associated with events such as the blockade of the Strait of Hormuz, there is a possibility that an extreme short-term "surge" in crude oil prices, similar to what occurred during Russia's invasion of Ukraine, could be replicated. However, whether this possibility is viewed as high or low may vary among perspectives.

A significant rise in crude oil prices and interest rates is necessary for the yen to weaken to 150 yen.

Finally, let's look at the relationship between USD/JPY and the interest rate differential between Japan and the United States. USD/JPY rose to 146 yen last week (week of June 16), already far behind the interest rate differential between Japan and the United States (see Figure 4). Given the relationship between the two, the U.S.-Japan 2-year Treasury yield differential (U.S. dollar dominance vs. yen inferiority) that justifies the USD/JPY rise to 150 yen is likely to be around 3.6%, and the U.S. 2-year Treasury yield will need to rise significantly by more than 0.5% from its current level to realize this interest rate differential.

[Figure 4] USD/JPY and the US-Japan 2-Year Bond Yield Spread (from April 2025) Source: Created by Monex Securities using data from Refinitiv. From the above, in order for the strong US dollar and weak yen to return to 150 yen, both crude oil prices and US interest rates need to rise significantly. This has happened in the past, but it's unlikely to be that straightforward.