USD/JPY: 107.00 Gives Way, What's Next?

USD/JPY: 107.00 Gives Way, What's Next?

29 April 2016, 09:48
Roberto Jacobs

USD/JPY: 107.00 Gives Way, What's Next?

USD/JPY has seen a break through 107.00 at the London open, although no much follow through has been experienced so far, despite the momentum being clearly in favour of the bears, with some chatter that GPIF-related bids are resting sub 107 down to 106.70.

BoJ, FOMC disappointments = Yen bid to the boots

While the pair may re-adjust higher further down the track on policy divergence between the Fed and BoJ, short term, the pair has suffered two major setbacks, as both the US and Japanese central banks under-delivered in big style this week, despite the significant build up of speculation for both to either act with more easing (in case of the BoJ) or provide fresh clues on the next rate hike, if any (Fed).

USD/JPY has further downside room

Kathy Lien, Co-Founder at BK Asset Management, thinks that once the April low of 107.63 breaks (confirmed), "the next stop will be 106.65, the 38.2% Fibonacci retracement of the 2011 to 2015 rally", she wrote.

Not all turned bearish USD/JPY...

Credit Agricole shared its contrarian view on the USD/JPY, via eFXnews, noting that "the policy divergence implied from our rates forecasts could push USD/JPY at 116 by end-2016 and 121 by end-2017. However, when using the consensus expectations, the result is a very gradual appreciation to 111 by end- 2016 and 119 by end-2017."


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