MUFG Research discusses USD/JPY outlook and sees a scope for a move towards 130-level ahead of 135.
"The yen has continued to weaken sharply during the Asian trading session with USD/JPY on course for its thirteenth consecutive higher daily close. It would be the longest run of losses since the Bloomberg price data started in 1971. Yen weakness has been reinforced by further hawkish comments from Fed officials which continue to widen the expected policy divergence between the BoJ and the Fed," MUFG notes.
"It leaves the yen vulnerable to further weakness in the near-term with no clear fundamental trigger to prompt a reversal of the current bearish trend. Market participants will be increasingly targeting the 130.00-level for USD/JPY and then beyond the highs from in early 2002 at just above the 135.00-level. The latest IMM report highlights clearly that speculative yen selling has been ramped up in anticipation of further weakness," MUFG adds.
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