Analysts at TD Securities explained that after consolidating around the 113 level over the last several weeks, we think conditions are ripe for USD/JPY to take another leg lower as the March FOMC outcome has taken on an unexpectedly dovish tone.
Key Quotes:
“This fits closely with our long-held fundamental view for JPY strength. With the BoJ’s NIRP looking increasingly vulnerable to failure, we think the JPY could benefit from rising risk aversion among (domestic) investors.
Technically, we think we are reaching the apex of a ‘triangle‘ consolidation pattern. Typically, this is a ‘continuation’ pattern that suggests the price will extend in the same direction as the prior move.
We think short positions in USD/JPY offer a compelling risk/reward profile. We are targeting a move below 110 and think an extension toward 108.50 is possible. We advise placing stops above 114.55. Ideally, 114.15 should cap any remaining rallies if our scenario of immediate further downside is correct”
(Market News Provided by FXstreet)