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Analysts at Goldman Sachs cite three reasons why not to turn outright bullish on USD/JPY.

Key quotes

“First, while it has a unique sensitivity to long-end rates, the Yen will benefit with other G10 crosses if US front-end rates converge toward our dovish Fed call.”

“Second, speculative traders have turned net short JPY, and we have not seen evidence that bond outflows from Japan are materially picking up.”

“Third, JPY appears about 14% undervalued relative to our GSDEER-implied long-run estimate of “fair value,” and the TWI is at low levels relative to history.”.  

  • USD/JPY bears stay in control in Tokyo for fresh 6-week low
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