USD/JPY topped 107 after a long period of depression in lower levels. What’s next? Here are opinions from Barclays and from TD:
Here is their view, courtesy of eFXnews:
USD/JPY: Technical Hurdles To Further Recovery – Barclays
Barclays Research discusses USD/JPY outlook and thinks that while near-term dynamics should remain driven by global risk sentiment, the scope for recovery will likely remain limited amid fragile risk sentiment and concerns about trade issues.
“At the beginning of new fiscal year in April, Japanese investors (namely banks) tend to sell both JGBs and foreign bonds to lock in profits. However, given that three megabank groups’ foreign bond portfolio had incurred unrealized losses even as of end-2017, the scope of seasonal selling of foreign bonds in April may be more limited,” Barclays argues.
“Technically, the weekly Ichimoku tenkan line and 50dma both around mid-107s could weigh on the rebound. Indeed, we expect a range-trade in USDJPY in the near term with our forecast of 105 for Q2,” Barclays adds.
USD/JPY: Risk-Reward Asymmetric Around Current Levels – TD
TD Research discusses USD/JPY outlook, and thinks that risk-reward for strategic (medium-to-long-term) doesn’t seem attractive around current levels.
“108 remains the big line in the sand, and one that should be respected. Before this, 106.80/107.00 may prove to be durable resistance as this represents the daily downtrend established from the late-February highs.
With Kuroda displaying a split personality when it comes to an exit strategy, we would view the risk/return profile for USDJPY as asymmetrically tilted to the downside from a strategic point of view,” TD argues.