Currency analyst

USD/JPY: a new upsurge? Let’s ask banks

There is a steady bullish trend on the technical chart of USD/JPY currency pair. Yesterday yen showed a rather tepid reaction to better than expected trade balance figures. The data showed that the nation exported more goods abroad than it imported (the nation’s balance was ¥243.2 versus expected ¥116.5 bln). In contrast, dollar managed to strengthen its positions in the course of the Asian session as Charles Evans, president of the Federal Reserve Bank of Chicago, said that the Fed will have to peg a rate hike in December.

Morgan Stanley and Goldman Sachs reacted to the pair’s upsurge with opening longs. MS is going to buy once the pair falls near 102.5, while GS is going scale into long positions from the present levels and add through 105 placing a stop loss at 101.84.

Morgan Stanley makes its projections based on macroeconomic analysis, while Goldman Sachs operates through technical charts.

Morgan Stanley believes that JPY will continue to depreciate against US dollar as Bank of Japan proceeds with its brand-new monetary measures. They sustain bank profitability and allow yen to fall further. In addition, the BoJ is determined to issue more long-term bonds and to provide a fiscal stimulus for staggering Japan’s economy in the next few months. MS sees a buying opportunity once the quotes reach the 102.5 level and expect the USD/JPY to rise up to the 108.1 mark.

Goldman Sachs pays attention to the fact that the quotes reached their January highs and closed above the 100-day MA. It defined its next target at 104.86 (the August low). If the resistance line at this level is tested successfully, the quotes may rise up to the 108 level. 

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