USD/JPY: Risks appear more titled to the upside in the near-term – MUFG
22.02.2023, 16:19

USD/JPY: Risks appear more titled to the upside in the near-term – MUFG

Analysts at MUFG Bank have a neutral bias for the USD/JPY pair and they see it trading in the 128.00 – 138.00 range over the next weeks. They affirm that market attention is set to intensify again in the month ahead over potential shifts at the Bank of Japan ahead of Governor Kuroda’s final meeting.

Maintaining our neutral USD/JPY bias for the month ahead

“Stronger US growth and firmer inflation at the start of the year have also provided a more solid external backdrop for USD/JPY and will make a break back below the 130.00-level a tougher nut to crack in the near-term. On the topside the next important resistance level is provided by the 200-day moving average that comes in at just below the 137.00-level. After weighing up risks from the repricing of BoJ and Fed policy outlooks, we are maintaining our neutral USD/JPY bias for the month ahead.”

“Risks appear more titled to the upside for USD/JPY in the near-term. After finding good support at around the 130.00-level over the past month, the pair is moving back towards the 200-day moving average at just below the 137.00-level. A break above the 137.00-level could open the door to a more extended rebound. Potential fundamental triggers for a higher USD/JPY include: i) the Fed displaying more concern over persistent inflation risks and the lack of slowdown in the US labour market prompting it to signal that rates need to rise even further above 5.00%, and or ii) the new BoJ governor signaling a stronger desire to leave policy settings unchanged for longer until at least a comprehensive assessment of policy has been conducted.”

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