USD/JPY: To trader near 110 on a 12M view with downside risks - Rabobank

Matías Salord FXStreet

Analysts at Rabobank, expect the Japanese yen to win back ground versus the US dollar during 2019 and consider USD/JPY could drop below 110 by the end of next year.

Key Quotes:

“The JPY may be the best performing G10 currency on a 1 day view, but the uptrend that has dominated USD/JPY since March remains intact. The strength of the USD this year has been built on the back of the Fed’s progressive policy tightening and the continued strength of the US economy. However, we maintain that in environments of severe investor stress or souring US fundamentals that the JPY is likely to outperform the USD. In 2019 we expect the JPY to win back ground vs. the USD and see scope for USD/JPY to move below the 110 level by the end of next year.”

“The USD’s outperformance of the JPY this year has been built around interest rate differentials. However, we anticipate that 2019 will bring a souring in the outlook for the USD. This could open the way for a move lower for USD/JPY.”

“Our central view is that USD/JPY will trade close to 110 on a 12 month view, but a worsening in either the outlook for world growth or the geopolitical backdrop suggest there is downside risk to this view.”

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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