USD/JPY set to reach the 125 mark soon – ING

FXStreet Insights Team FXStreet

USD/JPY continued its rally yesterday in line with yet another sell-off in bonds. Economists at ING expect the pair to reach the 125 level in the near-term. Meanwhile, the fierce hawkish re-pricing of Fed tightening expectations is set to offer a positive undercurrent to the dollar, mostly to the detriment of low-yielders.

USD/JPY may touch 125 soon

“We still believe USD can count on the supportive undercurrent offered by rising hawkish bets on Fed tightening. Expectations about half-percentage increases have been boosted by recent comments by Chair Jerome Powell and other FOMC members (like James Bullard) and we are seeing markets moving to price in two back-to-back 50bp hikes in May and June (an option that is around 35% embedded into money market pricing).”

“Another question for the dollar is where markets find comfort with their expectations on the Fed’s terminal rate, which are currently around 2.75%, but may soon reach 3.00%. We think this is an environment that should favour the dollar, net of risk-sentiment swings, especially against low-yielders (exposed to higher yields) and European currencies (exposed to lingering uncertainty in Ukraine).”

“After easily breaking above 120, we think a USD/JPY move to 125 in the near-term is likely given the combination of upbeat risk sentiment and rising hawkish bets on the Fed.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD trims intraday gains, stays flat around 1.1630

EUR/USD struggles to find direction and trades in a narrow channel on Monday. Investors refrain from taking large positions ahead of this week's critical Fed policy meeting, allowing the pair to stay in a consolidation phase following two consecutive weeks of bullish action. US Dollar gains ground as risk aversion kicks in.

GBP/USD edges lower toward 1.3300 as markets turn cautious

GBP/USD corrects lower toward 1.3300 on Monday after posting gains in the previous week. The markets adopt a cautious stance ahead of the highly-anticipated Fed meeting, making it difficult for the pair to gather bullish momentum.

Gold remains seases below $4,200 as markets gear up for Fed

Gold turned south after Wall Street's opening, trading south of $4,200. The US Dollar finds additional legs on a souring mood on Monday as market participants prepare for the upcoming Fed meeting, which will provide key insights into the short-term policy outlook.

Bitcoin and Ethereum aim for breakouts as Ripple holds at $2

Bitcoin, Ethereum, and Ripple record a minor recovery on Monday, starting the week on a positive note. The retail demand for major cryptocurrencies remains strong despite outflows from Bitcoin and Ethereum Exchange Traded Funds.

The Silver disconnection is real

Silver just hit a new all-time high. Neither did gold, nor mining stocks. They all reversed on an intraday basis, but silver’s move to new highs makes it still bullish overall, while the almost complete reversals in gold and miners make the latter technically bearish.