Senior Analyst at Danske Bank Mikael Milhoj believes the pair could head towards 114.00 in the medium to longer term.
Key Quotes
“USD/JPY edged lower overnight as the sell-off in JGB continues while 10Y US yields lost momentum. However, yesterday the cross touched our 1-3M target at 112, despite rising 10Y JGB yields, while higher Japanese yields in isolation are negative for USD/JPY, the BoJ’s policy now appears more robust and credible”.
“This will tend to be USD/JPY supportive as BoJ exit fears have eased. In all, we still expect the cross to remain underpinned over the medium term by Fed-BoJ divergence and global growth. We target 114 in 6-12M”.
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