USD/JPY: Heavy selling wave has largely passed - TDS
|Mazen Issa, senior FX strategist at TD Securities, suggests that at the moment, they think the wave of heavy selling in the USD/JPY pair has largely passed, but still expect the pair to trade with a heavy tone on the basis that equity repatriation will continue by the domestic investor base.
Key Quotes
“We expect this to remain a feature in the coming weeks as Japanese FY-end comes into view and capital preservation will become a motivating factor.”
“Though markets may be too extreme in their view on pricing in a chance of a cut this year, diminished Fed leadership vis-a-vis market pricing should also act as a weight for USDJPY. This, alongside compressed 10yr UST/JGB spreads should keep the pair anchored.”
“We turn more tactical and favor a sell-on-rallies posture for USDJPY, with 108.70 acting as a notable resistance marker. On the downside, we expect 105 to act as formidable support.”
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