USD/JPY expected to settle within 110.00-115.00 – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, keeps the constructive outlook unchanged for the pair.

Key Quotes

“USD/JPY trades slightly higher following the BoJ rate announcement and has generally been supported by constructive risk appetite overnight”.

“The BoJ kept its monetary policy unchanged as expected, but downgraded its assessment of inflation and now sees CPI inflation in a range of 0.5-1%, indicating that the BoJ might revise down its outlook for inflation in July in its quarterly outlook report. Hence, BoJ normalisation is still far away”.

“Over the medium term, we expect USD/JPY to remain underpinned by continued global growth outlook and Fed-BoJ divergence, and we expect the cross to settle in the 110-115 range eventually. In the near term, we expect USD/JPY to trade within the 108-111.40 range. We see political uncertainty in Japan as a downside risk factor for USD/JPY ahead of the Liberal Democratic Party’s (LDP) leadership election in September”.