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Apr 19 - 10:55 AM

USD/JPY: A Test Of 130 Before Slipping Back To 125 In Next 6 Weeks Or So? - SocGen

By eFXdata  —  Apr 19 - 09:30 AM
Societe Generale Research discusses USD/JPY outlook in the near-term.
"There’s no doubt at all that the yen’s moving too fast. The 9-week USD/JPY RSI has only spent a dozen week in the 90s since 1984, most of them in 2013, when Abenomics arrived, and USD/JPY rose from 85 to 105. Back then, the weaker yen was a clear policy choice and the MOF/BOJ didn’t lose their nerve as it fell. But the 10-year Treasury/JGB yield differential widened by 220bp during the course of the year," SocGen notes. 
"Will the Japanese authorities stay the course? The weaker yen can help restore competitiveness, but only after a lag. Before then, it will boost import prices and importers will struggle to pass those on. I would favour sticking with weak yen policies but if the Finance Minister remains vocal, those stretched RSI levels demand a significant correction. In 2013, May/June saw a correction that took USD/JP down from 103 to under 95, and wouldn’t be at all surprised to see a test of 130 followed by a slip back to 125, say, in the next 6 weeks or so," SocGen adds. 
Société Générale Research/Market Commentary


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