USD/JPY expected to stay within range – Danske Bank

Mikael Milhoj, Senior Analyst at Danske Bank, believes the pair should remain within the recent range in the near to medium term.

Key Quotes

“Besides North Korea, the US debt limit issue is likely to intensify over the next month and keep a lid on risk appetite, bond yields and USD/JPY. Hence, USD/JPY is likely to trade in the lower end of the broad range of 108-115 in the coming month”.

“There are still a few short-term positives for the USD as well, namely a soft pricing of a Fed hike in December and tighter USD liquidity, which could benefit the USD in coming months and still supports the case for higher USD/JPY three to six months ahead”.

“We are still long USD/JPY in Danske bank’s FX Trading Portfolio with a target of 114.50, but given the heightened near-term risks, we would consider closing the trade on moves in the spot towards 111.50”.