USD/JPY: Bearish bias but correction to be reversed – BTMU

FXStreet (Córdoba) – According to Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, the short term outlook is titled to the downside in the USD/JPY pair, but a correction is likely to be reversed.

Key Quotes:

“While there are downside risks for USD/JPY at present, we would expect the capital outflow factor to persist and that should mean that any near-term correction lower is reversed, especially given our view that broader financial market conditions should also gradually improve over the coming months.”

“Lower levels in USD/JPY will likely result in a pick-up in capital outflows and with government-related entities likely to continue to be active in diversifying domestic assets into foreign securities. But over the very short-term risks appear to be more to the downside.”

“The dollar selling has been quite broad-based as expectations of Fed tightening gets pushed further back. This may result in further yen strength over the short-term but as highlighted we do not envisage a scenario of sustained yen gains.”

According to Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, the short term outlook is titled to the downside in the USD/JPY pair, but a correction is likely to be reversed.


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