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1 Jul 2014
USD/JPY eyes 107.00 medium-term – Rabobank
FXStreet (Edinburgh) - In the view of Jane Foley, Senor Currency Strategist at Rabobank, the USD/JPY could hit the area of 107.00 in the upcoming months.
Key Quotes
“Speculation that the BoJ could announce further stimulus at its July 15 policy meeting has been fading as a consequence of the upbeat tone of policy makers over the past couple of months”.
“Since reaching a high in the USD/JPY102.80 area in early June, USD/JPY has been bias lower. We would attribute this to three separate factors. Firstly, geopolitical tension may have been responsible for some safe haven purchases of the yen. Secondly, on the back of the BoJ’s upbeat tone the market has been paring back its expectations of further easing by the BoJ this summer. The third factor is the continued sogginess of the USD”.
“In the near-term, USD/JPY could therefore also push lower. Last week the currency pair broke below the 200 day sma suggesting further losses could be in store. Currently, USD/JPY is positioned at the top on the weekly cloud at 101.40. A close below this level this week would also hint at further downside potential towards the 100.80 area initially”.
“While USD/JPY could go lower near-term, we maintain that there is a bullish medium-term argument. The BoJ is nowhere near ending its very aggressive QE programme. By contrast the Fed is expected to have drawn its asset purchases programme to a close by year end suggesting that on a relative basis, BoJ policy will appear even more extreme. We expect USD/JPY to push towards the 107.00 area next spring”.
Key Quotes
“Speculation that the BoJ could announce further stimulus at its July 15 policy meeting has been fading as a consequence of the upbeat tone of policy makers over the past couple of months”.
“Since reaching a high in the USD/JPY102.80 area in early June, USD/JPY has been bias lower. We would attribute this to three separate factors. Firstly, geopolitical tension may have been responsible for some safe haven purchases of the yen. Secondly, on the back of the BoJ’s upbeat tone the market has been paring back its expectations of further easing by the BoJ this summer. The third factor is the continued sogginess of the USD”.
“In the near-term, USD/JPY could therefore also push lower. Last week the currency pair broke below the 200 day sma suggesting further losses could be in store. Currently, USD/JPY is positioned at the top on the weekly cloud at 101.40. A close below this level this week would also hint at further downside potential towards the 100.80 area initially”.
“While USD/JPY could go lower near-term, we maintain that there is a bullish medium-term argument. The BoJ is nowhere near ending its very aggressive QE programme. By contrast the Fed is expected to have drawn its asset purchases programme to a close by year end suggesting that on a relative basis, BoJ policy will appear even more extreme. We expect USD/JPY to push towards the 107.00 area next spring”.