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USD/JPY finished ~1 big figure lower despite limited fresh data and Fedspeak, as BoJ hike odds nudged higher on fears the bank is behind the curve.
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USD/JPY’s move lagged model/fundamental signals
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Expect JPY to be a bigger, steadier contributor to further USD depreciation in the months ahead.
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Baseline rates view implies ~4% more downside in DXY; falling hedging costs should spur reallocations (Europe) and greater Japan participation
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Even aside from Fed cuts, diversification/hedging away from USD is supported by lingering US institutional-governance concerns
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Trade idea: Stay short USD/JPY with a 142 target and 152 stop.
This article was written by Arno V Venter at investinglive.com.