USD/JPY: Longer term there is scope for  a move toward 100 – CitiBank

Analysts at Citibank, see the USD/JPY trading at 106 in a three month period and at 103 between the next six to twelve months. In the short-term, they consider the pair could rise further. 

Key Quotes:

“US-China tensions escalation and the concern of second wave crisis drove money flow into safe haven assets, which also support yen”. 

“We think the Yen fairs well as the V shaped stocks recovery meets headwinds from 2nd waves. More longer term, we do see scope for a move down toward 100. We expect the BoJ to lift its short-term policy rate to 0% in October 2021, alongside a hike in its 10yr JGB yield target.”

“The pattern on USD/JPY now looks like an inverted head and shoulders with a neckline at 107.63. A break above would signal the potential for a move as high as the 06 April high at 109.38 again. However, USD/JPY is testing good resistance at 107.55/60 (55-day MA). A close below would suggest at least a pause in this rally”.