USD/JPY caught within range – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen expects the pair to remain within the 108.25-110.84 range for the time being.

Key Quotes

“USD/JPY bounced above 110 on Friday for the first time since 24 January supported by BoJ’s fixed price operation and the strong US jobs report”.

“The correlation between US fixed income market and USD/JPY has broken and USD/JPY is currently caught between two opposing forces as rising US yields currently weighs on global equity markets. The BoJ’s fixed price operation announced on Friday reaffirmed that the yield curve control remains in place and should help underpin USD/JPY for now”.

“We expect USD/JPY to trade within the range of 108.25 -110.84 in the near term. Speculative short JPY positions were slashed substantially in the week ending 30 January, according to the IMM data. Investors are still very short JPY though, but last week’s sell-off indicates there may be some room on the upside for USD/JPY from a positioning point of view”.

“Next focus point for JPY will be the announcement about the BoJ’s leadership. Japan's government will likely present its nominees around mid- to late February at the earliest”.