USD/JPY: risks skewed on the downside – Danske Bank

“USD/JPY is slightly under pressure this morning, as concerns about a potential US government shutdown weigh on the cross” writes Christin Tuxen, Chief Analyst at Danske Bank. 

Key quotes:

“In the near term, we see USD/JPY within the range of 110.20-111.50 ahead of next week’s Bank of Japan (BoJ) meeting, with risks skewed on the downside amid stretched positioning, the risk of a potential US government shutdown, uncertainty about the BoJ’s future leadership and BoJ QE tapering concerns. Tuesday’s BoJ press conference at the BoJ meeting will be crucial for the JPY: we expect BoJ governor Haruhiko Koruda to repeat the dovish stance from the December meeting, which could temporarily support USD/JPY. However, any rally is likely to be short -lived as a soft stance from the BoJ might not be enough to restart significant JPY selling in the near term.”