USD/JPY: Neutral bias, likely in a near-term equilibrium zone — MUFG

The pair USD/JPY it trades back below 130.00 after failing to break above 131.00. MUFG Bank analysts They are neutral on the pair and see it trading in the 127.00-134.00 range for the next few weeks.

We may have entered a short-term equilibrium zone

“Importantly, BOJ speculation has played a secondary role when considering the global 20-big-figure drop in USD/JPY. The global fundamental undercurrent and intervention by the Japanese authorities combined to provide powerful impetus for a correction.” The downward turn in US inflation, the nearness of the expected end of monetary tightening outside Japan and the collapse in energy prices are factors that support the yen.”

“Speculation about the YCC’s monetary policy could pick up again. The main candidates to replace Governor Kuroda (Amamiya, Nakaso and Yamaguchi) are expected to move away from “Abenomics” (to varying degrees), which means that speculation It could pick up later in the second quarter.”

“We have narrowed the range for USD/JPY in the coming month and assume that the big move of the last three months will lead to tighter range trading. The announcement that Hirohide Yamaguchi will be nominated to the Diet could trigger further As markets anticipate sharp swings in the YCC, this would imply a sharper-than-expected move lower, conversely, a 50 basis point hike from the Fed and a tougher statement from the Fed. FOMC would trigger a higher than expected move.”