The USD/JPY was supported firmly at ¥115-117.5 by buying on weakness by Japanese investors and importers even under January's risk-off atmosphere, notes Deutsche Bank.
"There is solid real purchasing demand for the USD/JPY. The global economy remains on a slow but steady uptrend. It may be difficult for now to maintain either long or short positions for a long period, and we expect the markets to swing between risk-on and risk-off sentiment every some months," DB projects.
"With festering concerns such as the Greek problem, we suspect the markets are unlikely to become sufficiently confident to buy the USD/JPY in over ¥120 zone anytime soon. Still, we do expect unwinding of massive risk-off positions (though perhaps not total) in the coming few months," DB argues.
"We recommend that investors slowly but surely build long positions in the USD/JPY by buying on weakness as the currency pursues its winding uptrend," DB advises.
