According to the latest market research report released by Dr. Claudio Wewel, a forex strategist at Credit Suisse, the Japanese yen weakened slightly after the recent halt in its upward trend, drawing market attention to its future direction. Although the recent decline in the USD/JPY exchange rate has greatly narrowed the forex yield differential, it has not completely narrowed, indicating that the yen still has further upside potential.

Given recent data showing that most speculative short positions have been cleared, the appreciation pace of the yen will be slower. Therefore, it is expected that the USD/JPY exchange rate will remain at the current level in the short term and tend to reach 140 yen to 1 dollar by the end of the year.

A series of events has triggered a rebound in the Japanese yen, including weaker-than-expected US June CPI, forex intervention strengthening the initial trend, a hawkish attitude at the Bank of Japan's July meeting, and disappointing US manufacturing and labor market data.

Perhaps most importantly, the sharp rebound of the yen has led to the unwinding of the largest yen carry trade in 20 years. Although this unwinding has significantly narrowed the interest rate differential between the US dollar and the yen, it has not completely closed, indicating that the yen still has further upside potential.