07 December, AtoZForex.com, London – Against a backdrop of increased financial market volatility, Deutsche Bank turns to safe haven asset JPY to asses and evaluate the currency against the US Dollar. The following is a guide for currency investors on how to trade USDJPY in 2016.
How to trade USDJPY in 2016
Deutsche Bank notes that the bullish cycle for USDJPY should continue to be supported as long as the Fed initiates interest rate cycle in the background of a solid US economy.
"We forecast the USDJPY will be 128 at end-2016,” Deutsche Bank projected, however, “even though interest rate hikes will likely continue in 2017, we believe that the USDJPY average rate that year could be lower than in 2016.”
Deutsche Bank believes that Japanese investors and importers will continue to long USD on dips and support the USDJPY at the rate near 120. If confirmed, longing USDJPY from dips around the level and gradually selling for take profits should remain an effective tactic.
Throughout 2012 to 2014 Deutsche Bank recommended for currency investors to strategically long USDJPY based on the most bullish outlook at that time. Since the beginning of 2015 the analysts have amended the recommendation to a slightly differed tactical approach, resulting in a better performance.
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“For the USDJPY in 2016, we think it appropriate to take a similar stance as 2015 (longing while gradually selling), while raising the expected high to around 128." Deutsche Bank advises.
Short term view
Adding to the article, Barclays provided its short term technical outlook and set-up for USDJPY.
Looking back from the previous week, Friday’s recovery rally has encourages the strategy team’s bullish view. “We look for support in the 122.20 area to underpin a move through 123.75,” Barclays noted. The initial targets are towards the 125.30 – 125.85 highs.
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