A relevant factor for the USD/JPY pair is that it has been driven solely by the US dollar, argue analysts at Danske Bank. They see USD/JPY with difficulties breaking above 110.
Key Quotes:
“USD/JPY has been thrown back and forth by moves in global risk aversion, commodities and domestic fiscal response on the one side (stronger JPY), but also a very weak domestic economy and recently a global stabilisation in risk sentiment (weaker JPY) on the other. Currently, the key issue in USD/JPY is that moves have been driven solely by the USD leg. Thus, USD/JPY declines when EUR/USD goes up, rather than the opposite. Looking ahead, we expect the terms-of-trade effect from rising commodities to dominate in tandem with a declining USD.”
“We continue to expect 112 in 6M and 12M (unchanged). Near term, we see USD/JPY as trading in a 107-110 range with difficulties breaking through 110.”
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