Senior Analyst at Danske Bank Piet Christiansen believes there is scope for extra pullbacks in spot.
“JPY continues to strengthen. Overnight, the technical support level at 107.25 was taken out in USD/JPY and both USD/JPY and EUR/JPY are trading lower this morning”.
“Price action suggests that the break lower in USD/JPY is technically driven on the back of general USD weakness with lots of short JPY positions exposed to the sell-off. In the short term, the strong momentum and stretched short JPY positioning suggest that further downside could be in store for USD/JPY”.
“Look out for a reaction from the Bank of Japan. We are currently reviewing our USD/JPY forecast”.
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