USD/JPY heading back towards 115.3 - Natixis

Analysts at Natixis explains that clearly, the Japanese yen is undergoing a consolidation, tracking the consolidation by US Treasuries and/or equity markets.

Key Quotes

“US long interest rates will pick up only if expectations of a hike in the Fed Funds rate heighten, notably in the run-up to the 15 March FOMC meeting. Even though a gesture is unlikely at this meeting, the statement from the Federal Reserve should be more hawkish, which will impact US long interest rates. There follows that the spread between US and Japanese long rates should widen since the Bank of Japan is continuing to intervene to curb the rise in the Japanese 10-year rate and keep it close to zero percent. Under these conditions, we see the USD/JPY recovering towards 115.3 and the EUR/JPY towards 121.50.”