USDJPY:
The yen remains weak due to political factors in Japan and expectations of expanded fiscal support, which heighten doubts about a swift tightening of financial conditions. Government discussions and signals about possible stimulus measures encourage participants to add dollar positions against the yen.
Even with occasional warnings from the authorities about “one-sided moves,” the market focuses on the persistent yield gap between the US and Japan. A prolonged period of inflation above the reference level has not translated into a faster pace of rate increases by the central bank, and the rate differential remains the anchor for the pair’s upward trend.
Global risk sentiment is mixed, but demand for the dollar tends to hold during market pullbacks. Absent a firm set of signals pointing to an imminent rate hike and tightening of financial conditions in Japan, the base case is that USDJPY stays in the upper range with attempts to move toward 153.00.
Trade recommendation: BUY 151.95, SL 151.50, TP 153.00
Origin: FreshForex
