Citi expects the U.S. dollar to weaken against the Japanese yen over the long term now that the U.S. midterm elections are over. The bank still sees near-term risks of yen weakness, and it expects Japanese authorities to keep defending the currency.
Citi expects the U.S. dollar to weaken against the yen over the long term following the conclusion of the midterm elections. The bank said, however, that near-term risks of yen weakness remain.
The key near-term factors, according to the bank, are the direction of U.S. equities after the elections, geopolitical risk, and crude oil prices linked to the situation in Iran. Crude prices also play an important role in the economic policy outlined by Treasury Secretary Scott Bessent, the firm added.
Japanese authorities' ongoing efforts to defend the yen are not expected to change, Citi said. It anticipates the next round of intervention to buy the yen if USD/JPY tests ¥160 per dollar.
During such an intervention, the authorities are likely to attempt to push the pair below ¥155 per dollar, Citi said.
The bank noted that the risk of yen weakness will continue in the short to medium term despite the expected long-term downtrend in the dollar-yen pair.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
