Citi expects Japan to intervene in currency markets near ¥160 per dollar, capping room for EUR/JPY to climb further. The bank projects EUR/JPY could slide toward ¥170 next year, with AUD/JPY also facing downside risk.
Citi expects Japanese authorities to intervene in currency markets at approximately ¥160 per dollar, according to a research note released Thursday. The bank expects those efforts to push USD/JPY below ¥155.
Intervention and rising interest rates are starting to put upward pressure on the yen, Citi says. Yet the bank warns that a renewed recovery in Japanese and U.S. equities could renew downward pressure on the currency if risk-on sentiment returns.
Citi sees limited upside for EUR/JPY in this environment. The bank projects EUR/JPY could fall to around ¥170 per euro next year, though this move could arrive sooner if turmoil in European markets intensifies.
Citi also flags downside risk for AUD/JPY. The bank cautions the pair could decline to around ¥105 per Australian dollar in the foreseeable future.
Source: Investing.com
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