USD/JPY Under 110 – How Low Can It Go?

Dollar/yen is finally made the break, after a few failed attempts. It trades under 110. What’s next? Here are two opinions:

Here is their view, courtesy of eFXnews:

USD/JPY: Risk Tilted To The Downside Toward 200-d MA At 108 – Barclays

Barclays Capital Research expects further USD/JPY weakness on the back of fragile risk sentiment, declining UST yields amid fading Trump policy expectations and rising geopolitical concerns.

“Without major domestic drivers until the BoJ meeting on 26-27 April, JPY should remain driven mainly by external factors, such as US rates and general risk sentiment, but we judge that the risk is tilted to the downside toward 108 (200-dma),” Barclays projects.

Barclays also expects the appreciation pressures for the JPY to extend to some cross-yen rates, such as EURJPY and AUDJPY, which continue to trade below their YTD lows.

USD/JPY is trading circa 109.70 as of writing.

JPY: Fading Of Reflation Trade Likely To Continue N-Term – BTMU

BTMU FX Strategy Research notes that the JPY  has strengthened modestly during the Asian and European trading session resulting in USD/JPY moving back towards key technical support at the 110.00-level.

In this regard, BTMU believes that in the near-term, the JPY is likely to continue benefiting from the ongoing reversal of investor optimism in reflation trades.

“The recent pick up in headline measures of inflation has been driven mainly by higher energy prices which is likely to fade during the rest of the year given that the annual rate of change in the price of oil has already peaked…The yen is also benefitting at the margin from the more risk-averse trading environment in the near-term which has been triggered by heightened geopolitical tensions regarding Syria and North Korea,” BTMU notes.

USD/JPY is trdaing circa 110.30 as of writing.