Forex Flash: USD/JPY may see downside ahead - Societe Generale (Barcelona) - Sebastien Galy, Senior FX strategist at Societe Generale notes that of late he is particularly focused on the potential range for USD/JPY looking forward.

He comments that following the BOJ QE policy announcement, his valuation model estimates a fair value of 99 for USD/JPY (93 pre BoJ meeting), with a topside of 116 over the next two years using a quantile estimation. He writes, “In a deep risk-off environment, USD/JPY will have a tendency to fall to the lower 90s. Deep downside vols will steadily be crushed at higher levels over the next two years, similarly to the experience with the SNB floor.”