Usdjpy To Remain Bearish Scotiabank

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Usdjpy To Remain Bearish Scotiabank

Usd/Jpy To Remain Bearish - Scotiabank

According to a senior FX strategist from Scotiabank, the USD/JPY will remain bearish in the medium term. They added that the short-term outlook for the USD/JPY is mostly flat amid weaker data and a supportive yield.

They believe that the pair will continue to trade in a tight range for the time being. But why? The recent economic data, such as the Tokyo CPI, retail sales, and even the industrial production data, have failed to impress the markets.

Sread Yields To Get Narrower

In the medium to long term, the Japanese Yen will remain bullish.

Meanwhile, the Fed will turn more dovish in the coming months. So, a combination of a dovish Fed and a hawkish BoJ will lay the groundwork for a bearish USD/JPY pair.

In the coming months, the US and Japan's yield spread will turn narrower. As a result, the USD/JPY will show divergence and move lower.

With all things considered, Scotiabank believes that USD/JPY is en route towards 142.00. It's worth noting that USD/JPY is trading way above the 145.00 support level for now.

So, a combination of the weaker data and narrow spread yields will turn the USD/JPY weak in the coming months. But one thing that could turn this forecast upside down is the Fed's reluctance to lower the rates.

At the same time, if the BoJ decides to wait once again on a rate hike, that would also invalidate the forecast made by the Scotiabank.

But given the upcoming changes that are expected in the US Federal Reserve, the only obvious outcome is a rate cut. After all, the US government wants someone in the Federal Reserve who will act on its policy of low interest rates.00.

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