HSBC Forecasts USD/JPY Downtrend From Mid 2023, Highly Volatile In Short-term
HSBC is a banking giant with a presence in multiple countries. This allows the bank to have a keen eye on the economic landscape and to make forecasts with high accuracy.
Recently, HSBC economists have hinted towards some major volatility in USD/JPY for the short term. They also said USD/JPY would reach 120.00 by the end of 2023.
HSBC Hints Toward Bearish Pressure In USD/JPY
According to HSBC, all the factors that support the appreciation of the Japanese Yen in 2023 are in place. However, the US Dollar/Japanese Yen will remain volatile in the short term.
They said that there are a lot of uncertainties from external circumstances. Similarly, there are also several domestic factors that will lead to higher volatility in the USD/JPY.
The first factor is the policy tweak from the Bank of Japan and the 2nd factor is the current account improvement. Similarly, the FX heading and the safe-haven status of the JPY will also lead to depreciation in the USD/JPY pair.
Based on this, HSCB economists believe that the long-term directional bias of USD/JPY is tilted downwards. In addition, some of the factors listed above may take some time to materialize.
That's why we might have to wait a few months before seeing strength in the JPY against other pairs. This would lead to downward pressure in USD/JPY, EUR/JPY, well as other JPY pairs.
In the meantime, the recent banking crisis in Europe and the USA is also positive for the JPY as well as gold.
The USD/JPY technicals reveal that the nearest resistance is 138. On the downside, the support is present near 132.00 and 131.00 based on the daily USD/JPY chart.
If for some reason we witness buying pressure in USD/JPY, the next resistance after the 138.00 level is located near 142.00, 146.00, and 150.00.
And if something major happens on the technical and fundamental side, the USD/JPY pair forecast might get an update from the HSBC as well.