USD/JPY: To remain in 107-110 range near-term, then higher – Danske Bank

Matías Salord FXStreet

Analysts at Danske Bank, continue to see the 110 area in the USD/JPY pair as a short-term ceiling. They point out that events that could take it toward 105 include declining commodity prices, or further deterioration of expectations to global demand.

Key Quotes:

“USD/JPY has been thrown back and forth by moves in global risk aversion, commodities and domestic fiscal response on the one side (stronger JPY), but also very weak domestic economy and recently a global stabilisation in risk sentiment (weaker JPY). We expect a mild uptick in longer-term US interest rates and this should take USD/JPY up over the coming months.”

“We continue to expect 112 in 6M and 12M (unchanged), which still reflects our view of a strong USD. EUR/JPY has seen a sudden resurgence based on renewed EUR optimism over May and June. Near term, we see USD/JPY as trading in 107-110 range. Do note that over recent months, we have seen the USD leg dominate price action in the cross. Thus, declining broad USD takes USD/JPY lower, rather than higher which one would normally have expected due to the effects of rising commodities and yields in a ‘risk-on’ scenario.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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