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USD/JPY Forecast Pre-Election

2 months ago
2 months ago


USD/JPY Pair Analysis: Citigroup Predicts Future Movements

Volatility in the USD/JPY Pair

The USD/JPY pair has recently experienced volatile trading, with Citigroup providing insights into its likely movements amidst upcoming elections in both Japan and the US.

Current Trading Status

  • At 09:00 ET (13:00 GMT), USD/JPY traded 0.1% lower at ¥148.09
  • The pair had reached a two-month high of ¥149.12 at the beginning of the week

    Japan’s Political Landscape

  • Shigeru Ishiba, the 102nd Prime Minister of Japan, called for a snap election on October 27
  • The Lower House has 465 seats, with the LDP holding 258 and its coalition partner Komeito holding 32
  • PM Ishiba’s success will be judged on maintaining a majority of 233 seats for the LDP-Komeito alliance

    Impact on USD/JPY Pair

  • Citi analysts believe the Japanese general election may not significantly impact USD/JPY
  • The upcoming US Presidential election is likely to have a greater influence on the pair

    Future Scenarios

  • JPY-buying interventions may be accepted under both Harris and Trump administrations
  • Selling JPY (buying USD) interventions could become challenging, especially under a Trump administration

    Citigroup’s Long-Term Outlook

  • Citi is bearish on the USD/JPY pair in the long term
  • The base-case scenario for the medium term suggests a recovery to around ¥150 by year-end

    Technical Analysis

  • The 350-day moving average (around ¥149 currently) is now acting as a resistance line
  • Near-term upside potential is seen towards the 100-day or 200-day lines (around ¥151.5 currently)

    Analysis:

    The Citigroup analysis provides valuable insights into the potential movements of the USD/JPY pair in the context of upcoming elections in Japan and the US. Understanding the impact of political events on currency pairs is crucial for investors and traders alike. The analysis highlights the following key points:

    1. Political Influence: Elections in Japan and the US can significantly affect the USD/JPY pair, with the US Presidential election expected to have a more substantial impact.
    2. Intervention Scenarios: The analysis discusses possible intervention scenarios under different administrations, shedding light on how government policies can influence currency markets.
    3. Long-Term Outlook: Citigroup’s bearish stance on the USD/JPY pair in the long term emphasizes the importance of considering broader economic trends for informed investment decisions.
    4. Technical Analysis: The technical analysis provided by Citi offers a practical perspective on potential price movements, helping traders identify key support and resistance levels.

      Overall, this comprehensive analysis equips investors with the necessary information to navigate the complexities of the currency market and make strategic decisions to protect and grow their investments.

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