Bank of America Global Research discusses the JPY outlook and maintains a bearish bias targeting USD/JPY around 138 this summer.
"Our discussions with investors indicate the market's interest in USD/JPY has been skewed to the downside - at least until very recently - as the slowdown in the Fed's rate hikes has coincided with rising speculation over the BoJ's potential shift away from ultra-dovish monetary policy," BofA notes.
"While USD/JPY's upside may be capped near-term with a new BoJ governor set to take over Haruhiko Kuroda in April, we have argued (1) USD/JPY is due to rebound above 135 after spring (BofA forecasts 138 in the summer) and (2) a cyclical JPY rebound on potential rate cuts by foreign central banks - possibly in 2024 as priced by the market - would not match the magnitude of past JPY rebounds, due to JPY's structural headwinds limiting the margin of the BoJ's policy tightening and cyclical repatriation flow," BofA adds.
For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.
