USD/JPY Limited Downside? – Rabobank
Senior FX Strategist at Rabobank Jane Foley, has hinted at the likeliness that JPY could have less room to extend.
“Despite recent speculation that Japan’s MoF could be poised to order the BoJ to intervene, we would expect that this is unlikely since it would be seen as a blatant act of currency war which would potentially draw criticism from the US and other G7 nations”.
“While we see a fairly small risk of intervention, the chances of more BoJ policy accomodation this spring have been enhanced. Since the huge QQE programme has already depleted JGB supply, speculation is rising that the BoJ will increase involvement in other asset classes. Assuming risk appetite holds, this talk may help fend off further yen gains for now. USD/JPY should also find support on signs of oversold technical indicators”.