USD/JPY to grind higher towards the 120 area – ING

USD/JPY is building on last week's impressive gains and trades at its highest level since January 2017 above 117.50. Economists at ING expect the pair to inch higher towards the 120 level.

120, here we come

“Mid to late-cycle bearish flattening of the US yield curve should remain a positive for USD/JPY.”

“We continue to see the pair grinding towards the 120 area.”

“One of many wild cards this week is Russia's USD117mn payment on its Eurobond due this Wednesday. Russia has said that unless its FX reserves are unfrozen, it will only service this FX debt with roubles. This raises fears of a technical default. How such a technical default ripples through the global financial system (via the buy-side) remains to be seen. But a big leg lower in equities on the back of this could stop the USD/JPY rally in its tracks.”