In the view of the analysts at Citi Group, the risks remain skewed to the downside in USD/JPY in the coming months and breach of the key support near 104.80/50 could expose 100.00 levels.
Key Quotes:
“Escalating trade tension lead money flow into JPY.
Fed Chair Powell’s speech in Jackson Hole implied series of downside risks but did not mention any measures. The view was seen as leaning to dovish.
Any further BoJ ease will be reactive to ECB/ Fed easing and therefore likely following JPY strength.
Moreover, supports to Japanese activity may also stem from upcoming sporting events including the Rugby World Cup and 2020 Olympics.
As such, a continuing drop in UST-JGB yield differentials would likely point to a move back to $/JPY 100 or lower.”
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