Therefore, the yen’s strong start to the year will probably prove to be a temporary development: normal technical retracement limit against the dollar at USD/JPY 110-108, and key support area against the euro at EUR/JPY 117-115. However, the conditions which determined the recent rise could persist for a little longer than forecast, as:

● For what concerns the positive effects on US growth of a more expansionary fiscal policy, details on the measures to be implemented will not be disclosed before 2Q (between the end of 2Q and the beginning of 3Q);

● Potential risk aversion at the global level, fuelled by fears of protectionism, should be concentrated in the near term, i.e. in the phase in which the overall strategy will initially be drafted, when the debate/clash between President Trump and Congress could prove sterner;

● In Europe, political uncertainty could be at its highest in the near term, ahead of the elections in Holland in mid-March, and in France between April and May.

In general, risks to the baseline scenario could be skewed slightly upwards for the yen, which could therefore prove stronger than expected, in light of the many economic and political unknowns/uncertainties at the global level.



BoJ,-JPY,-Yen,-Bank-Of-Japan,-USDJPY,-Currency-Analysis,-fx-trader,-forexSource: Thomson Reuters-Datastream

Luca Mezzomo / Chief Economist
Asmara Jamaleh / Economist – Forex Markets
Intesa Sanpaolo Research Department