According to Dr. Claudio Wewel, foreign exchange strategist at Swiss Julius Baer Bank, although the recent decline in the USD/JPY exchange rate significantly narrowed the forex yield spread, it has not completely closed, indicating that the Japanese yen still has further room for upside. As recent data shows that most speculative short positions have been cleared, the yen's appreciation pace will be slower. Therefore, the bank expects the USD/JPY to remain at current levels in the short term, but trend towards 140 yen per dollar by the end of the year. Julius Baer Bank stated that the recent sharp rebound of the yen triggered what may be the largest yen carry trade unwinding in two decades. Although this unwinding significantly reduced the US-Japan interest rate differential, it has not completely closed, suggesting that the yen still has further upside potential. The bank cited a CFTC report from last Friday, indicating that over 80% of net speculative short positions have been cleared, so the remaining yen unwinding positions are unlikely to have a significant impact on currency trends, and it is expected that the yen's movement will once again be more in line with relative macro and yield dynamics. Julius Baer Bank believes that the US-Japan interest rate differential will continue to be driven by the US, but considering the resilience of the current US economic cycle, the room for further narrowing of the interest rate differential is limited. At the same time, since the end of July, US Treasury yields have fallen by close to 50 basis points, which should limit their downside potential. This means that the yen may trade near current levels in the short term, and the USD/JPY exchange rate should approach 140 by the end of the year.