75% Chance Of USD/JPY Fall Below 100 In Coming Weeks - Deutsche Bank
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The USD/JPY can overreact to even the slightest news amid the thin trading of the summer holiday season while it has recently wavered within a narrow ¥101-102 range.
As a rebound of the USD/JPY to ¥107 in the last month absorbed huge amount of exporters’ hedge selling at around ¥105, they do not need to rush to sell soon. Speculators have recently watched the rate reverse sharply just after breaking below ¥100 and may be a bit cautious in pursuing the downside soon. Along these lines, we see a 25% probability that the USD/JPY could remain above ¥100. However, we believe the rate would be supported only if US economy remains solid enough to justify Fed rate hikes.
Our main scenario is a drop below ¥100 in the near future, which we rate a 75% likelihood...Our official USD/JPY forecasts are ¥97 at end-September and ¥94 at end-December.