USD/JPY: Levels below 120.00 are plausible for later this year – MUFG
|According to analysts at MUFG Bank, the Japanese Yen is set to gain further ground on the back of monetary policy expectations from the Bank of Japan. They consider possible a slide under 120.00 for later in 2023.
Key quotes:
“USD/JPY has fallen further still today and is now 15.5% down from the peak on 21st October – each of the three months in Q4 brought reason to buy the yen – intervention by the BoJ in October and November and the YCC change in December. On top of that US inflation has fallen faster than expected. Will we get another clear reason to sell USD/JPY in January too? That looks very plausible at this juncture. YCC as a policy is only sustainable if credible and has the confidence of the market. That confidence is unravelling quickly.”
“USD/JPY today broke below the 61.8% Fibonacci level (128.61) of the retracement of the entire move from March last year to the high in October and suggests further downside ahead. Positioning could be turning excessive in anticipation of a YCC change next week so a risk of a near-term correction is increasing. Nonetheless, the downside move suggests a complete reversal of the 2022 move is feasible this year implying levels below 120.00 are plausible for later this year.”
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