USD/JPY – is it on the up and up? 3 opinions

USD/JPY is trading at the 111 handle, in the middle of the 108.10 to 114.30 range. The pair well represents the ebb and flow in the US dollar. What’s next? Here are some opinions?

Here is their view, courtesy of eFXnews:

BNPP Trade Of The Week: Buy USD/JPY

Currency investors should consider buying USD/JPY to position for a tactical USD rebound this week  , advises BNP Paribas Research in its weekly FX pick.

“We think the USD could rebound this week with several speeches from Fed officials including Fed chair Yellen on 27 June as well as Williams, Harker, Kashkari and Bullard. We expect the Fed to announce the start of its balance sheet reduction program in July, so Fed speakers could start signalling this shift in the near term.

Markets could quickly price in more tightening as market expectations for Fed tightening remain very subdued, with only one further 25bp rate hike priced by the end of 2018. US 10y nominal rates are only moderately above their lows ahead of the June FOMC meeting,” BNPP argues.

USD/JPY is trading circa 111.40 as of writing.

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USD/JPY: Attempting Double Bottom On Weekly Charts: Levels & Targets – Citi

CitiFX Technical Strategy Research notes that USD/JPY posted a bullish outside week last week indicating higher levels ahead.

“The setup forming looks to be a double bottom which has previously given signs of a decent rally  – in both early 2012 and again last year.

The key level to watch is 114.37. A weekly close above there would confirm the setup and indicate a rally to almost 120,” Citi adds.

USD/JPY is trading circa 111.25 as of writing.

USD: Will The USD Be Vulnerable Another ‘Lowflation’ Week? – Nordea

Nordea FX Strategy Research notes that this week’s  PCE-price data (Thu)  is one chance for the market to reassess the Fed outlook.

In that regard,  Nordea thinks that this week’s PCE deflator  print is unlikely to be a hawkish game-changer this month, but still believes that the recent downtrend in US inflation is of a transitory nature, as June is the peak month for the negative FX impulse for import prices.

“Also judged by other indicators, June could be the trough in inflation..The ECB is still looking for an upward trend in core inflation. The super-core inflation measure, which is constructed to correlate with the amount of economic slack in the economy, is yet to show a trend,” Nordea adds.

“Given recent flows and positioning trends, the EUR looks more vulnerable to weak data short term than the USD,” Nordea argues.

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