FxWirePro: Yen might extend decline towards 120 per dollar

Back in September, we suggested global political and economic uncertainties likely to weigh more on the yen than loose monetary policy including yield curve control from Bank of Japan and we saw yen to weaken not beyond 111 per dollar. We also said that the strength of the dollar would be a key factor here, especially after it reached our long-term target at 98 per dollar after Brexit. Read “FxWirePro: How to trade Yen after BoJ policy?” at http://www.econotimes.com/.

However, after US election we revised our forecast on yen and suggested that it is likely that the yen would reach 115 per dollar. Read, “FxWirePro: Yen sell-offs likely to extend towards 115” at http://www.econotimes.com/.

We are once again revising are yen forecast lower, looking at the strength of the dollar, and looming inflationary threat. In addition to that, the dollar/yen 1-year basis swap has reached the lowest point since the Lehman crisis, which indicates desperate demand for the dollar.

We now expect the yen to weaken beyond 115 per dollar and reach as low as 120 per dollar. However, there is likely to be a correction from around 115 mark.