USD/JPY risks further downside – Danske Bank
|Chief Analyst at Danske Bank Allan von Mehren noted the pair could be under further downside pressure in the next periods.
Key Quotes
“The dovish FOMC minutes added to recent day’s downside pressure on USD/JPY and the cross fell sharply to around 111.20 last night driven by lower 10Y US yields once the key support area around 111.65 was broken”.
“While part of the sell-off in USD/JPY yesterday might be due to risk reducing ahead of US holidays, we still see risks skewed to the downside in the short term as speculative accounts are very short JPY”.
“Moreover, we stress that further flattening pressure on the US yield curve potentially could be a game changer for the JPY and thus represents a rising risk to our bullish USD/JPY forecast. Technically, a clean break of 111.20 would send the cross into rather unchartered territory with 110 as the next likely key support level”.
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