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.
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.