FXStreet (Edinburgh) – The pair could be headed towards the target level at 127.00 within the next 12-month, suggested analysts at Danske Bank.
Key Quotes
“USD/JPY continued its course north and broke above 124 last night”.
“Once again, price actions suggest that the main driver behind yesterday’s rally probably was stops being triggered”.
“We have called for another leg higher in USD/JPY driven by renewed USD strength and higher US interest rates with a 3M target of 125”.
“This scenario is likely unfolding right now even though relative rates only can explain very little of the recent days movement in FX spot”.
“Given that the Fed hike theme is likely to continue to develop over the summer and we still forecast significantly higher US interest rates in the coming months, risks remain skewed towards USD/JPY reaching and possibly overshooting our 12M forecast of 127 in the short term”.
“Longer term we still expect the cross to stabilise again on a 6M to 12M horizon as it becomes clear that BoJ will not ease further and as the support to the USD stemming from higher US interest rates should fade after the first Fed Funds hike in September”.
(Market News Provided by FXstreet)