USD/JPY keeps pointing to 114.00 in the longer term – Danske Bank

In a 6-12 month horizon, spot is seen creeping higher and testing the 114.00 region, suggested Morten Helt, Senior Analyst at Danske Bank.

Key Quotes

“In our view, the BoJ’s monetary policy should remain supportive for USD/JPY in the longer term”.

“On the one hand, slightly higher Japanese yields and higher interest rate volatility are negative for USD/JPY. On the other, the adjustments have improved the credibility of the BoJ’s policy, which is positive for USD/JPY”.

“Global fixed markets and risk sentiment are likely to remain key drivers for the JPY. Taking FX positioning and the overall fragile risk environment into consideration, we see little near-term potential for a sustained rally in USD/JPY above July’s high of 113.17”.

“We target 111 in 1M (previously 112) and 112 in 3M. Over the medium term, we expect USD/JPY to remain underpinned by a decent global growth outlook and Fed-BoJ divergence. We target 114 in 6-12M”.