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Analysts at Citibank forecast the USD/JPY pair will likely trade around 107.00 over the next months. They see that while global central bank’s dovish stance may improve market sentiment may undermine the Japanese yen, the fact that markets may be confronted with stalled US fiscal stimulus talks plus US/China tensions and election uncertainty, may benefit the safe-haven yen.

Key Quotes:

“We are wary of rising volatility associated to either fiscal package for disappointment in the US or the event of a contested US election result. This tail risk could lead to significant political and societal unrest, and cause a volatility spike that has typically coincided with a safe haven bid. On the flipside, CB dovishness is likely to stand firm. As risk hedges unwind, this may cause USD/JPY to trade higher.”

“USD/JPY’s RSI stayed at neutral territory and the pair may range trade between 104.00-106.68, with next support at 103.09.”