USD/JPY seen at 112.00 in 3-month – Danske Bank

Senior Analyst at Danske Bank Morten Helt sees the BoJ incurring in further easing in the near term and thus pushing spot to the 112.00 handle in 1-3 months.

Key Quotes

“In the short term, we think the strong downtrend in USD/JPY is likely to persist – at least until disrupted by policy action. If USD/JPY continues to fall further in the coming weeks, the risk is that the BoJ might act before its monetary policy meeting on 28 April”.

“Stretched short-term FX drivers such as positioning and technical indicators imply BoJ easing might be able to counter the strong downward pressure on USD/JPY stemming from fundamentals. We look for a stabilisation of USD/JPY above 110 targeting the cross at 112 in 1-3M”.

“We remain bearish on the JPY on a six- to 12-month horizon versus both the
USD and EUR due to a combination of cyclical and monetary policy divergence and we recommend positioning for a weaker JPY ahead of 28 April”.