USD/JPY could test 104 in 6-12 month – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen sees the possibility that the pair could reach 104 in the medium to longer run.

Key Quotes

“Following the Bank of Japan meeting yesterday, we continue to see USD/JPY in the range of 100-105, targeting 101 in 1M and 102 in 3M”.

“On a 3-12M horizon, the prospect of a monetary policy surprise (either from the BoJ or the Fed) is low and while underlying support for JPY stemming from fundamental flows is likely to remain intact, we see the effects diminishing as the yen is no longer undervalued”.

“Moreover, we note that speculative accounts, according to IMM, are very long JPY, suggesting an increased correction risk towards a weaker JPY. Finally, we expect the market to continue to price in a probability of a BoJ rate cut in the future, which will remain a supporting factor for the cross. We target USD/JPY at 104 in 6-12M”.