USD/JPY expected to reach 121.00 in 1-month – Danske Bank

USD/JPY could retake the 121.00 handle within a month’s view, according to analysts at Danske Bank.

Key Quotes

“The JPY has weakened sharply since November when Trump was elected as the next US president. The move higher in USD/JPY has among others been driven by risk appetite, higher yields on 10Y US treasuries and a higher oil price”.

“According to the IMM data, investors appear to have turned around their positioning and are now short the JP.... We have lifted our USD/JPY forecast as we expect the JPY to continue to suffer in an environment with rising global bond yields and a higher oil price”.

“We target USD/JPY at 121 in 1M and 119 in 3M. Longer term, we expect USD/JPY to stabilise targeting 118 in 6-12M as we expect portfolio outflows out of Japan to counter the underlying appreciation pressure in the JPY stemming from fundamentals”.