USD/JPY: Target 105.0 in 3M-6M – Danske Bank

According to analysts from Danske Bank, the strength of the Japanese yen is not over. They expect global sentiment to remain the key driver in USD/JPY as risk-off, commodity sell-off and falling US rates run together and amplify each other to take the pair lower. 

Key Quotes: 

“Events that could take JPY below 105 include (1) declining commodity prices, (2) a continued deterioration of global demand, which looks likely as of today and (3) further negative news from the trade war.”

“We lower our USD/JPY forecast to 105.0 in 3M (previously 107.0) and weaken our expectation to a near-term rebound, lowering our 6M forecast to 105 (from 110). Strengthening global demand continues to be the base case on a 12M horizon, which shifts USD/JPY to 110.0 (unchanged forecast). The range of likely outcomes currently appears to be 105-110, with short-term risk being largely negative.”