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Nov 15 - 12:55 PM

JPY: Stretched JPY Position Leaves USD/JPY Risk Skewed To The Downside; Targeting 113.50 In 1-Month - Danske

By eFXdata  —  Nov 15 - 10:45 AM

Danske Research discusses JPY outlook and sees risks for a move lower in USD/JPY through 113.50 in 1-month.

"USD/JPY has moved higher driven by particularly higher US yields. Increasing inflation and strong growth on a global scale has been a fruitful environment for USD/JPY but factories have reached production limits on a global scale while goods demand continues to be strong. As global supply struggles to meet demand, inflation pressures will force central banks to tighten while at the same time fiscal stimulus wanes, which will move the global economy out of reflation mode and in to a period with slower growth and less inflation," Danske notes. 

"That will result in flatter yield curves and less pressure on commodity prices including oil, an environment with more tailwinds for JPY. If we add that speculators are stretched short JPY, it leaves USD/JPY risk skewed to the downside. We forecast the cross at 113.5 in 1M," Danske adds. 

Source:
Danske Research/Market Commentary

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