USD/JPY to target the 110.97 March high on Fed tapering hints – Mizuho
In May, the USD/JPY pair moved firmly in the first half of the month. The pair then moved with a heavy topside in the latter half of the month before rising sharply at the month’s end. In the view of economists at Mizuho Bank, dollar/yen will continue to move firmly in June.
The commencement of tapering discussions in the near future
“In the mid to long-term, the pair will be swayed by vaccination rates, but with the roll-out proceeding steadily under the Biden administration, economic activity is gradually starting to resume.”
“The FOMC will be meeting on June 17. The debate about tapering is unlikely to begin this month, but if some hints do emerge, US interest rates will probably face upwards pressure from mid-June onwards with the dollar/yen pair then likely to be supported by rising US interest rates.”
“The greenback will face considerable selling demand when the pair hits 110 yen. Transportation equipment manufacturers and so on are likely to place intermittent selling orders from this level onwards.”
“Institutional speculations will also grow more interested in selling the greenback when the pair climbs above 110 yen. USD/JPY looks set to move at a sluggish pace as these offers are processed, though the trend of yen bearishness looks set to continue. The near-term target will probably be 110.97, the pair’s recent high from March 31.”
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.
