Barclays: USD/JPY will reach 99.00 by the end of Q1 2019.

Temporal stability around the dollar and forecasts for the storm that hit the stock markets will hold USD/JPY at levels around 105-106 considered by the bank. In support of this idea is Bank of Japan's decision to shift the start of normalization of monetary policy 6 months ahead to early April 2019.

What the big banks think about the pair?

The average forecast for investment banks is to keep the pair slightly above current levels, around 107.50, with some of the forecasts pointing to levels of 120.00 as the maximum and 95.00 as the most negative scenario for the dollar against JPY.

Are these numbers realistic?

Looking ahead, as well as developing the world economy, JPY will grow, and this makes me think 120.00 is a mildly absurd level. Why? If the indices recover and the world economy continues to show healthy growth, Bank Of Japan will undertake a QE contraction, and this will lead to a JPY growth. Looking at other scenarios - stock market crash, 99.00 is likely to be the first pair's target. It's a matter of rescuing capital during corrections JPY is one of the most popular options for portfolio hedge.

Source: Bloomberg Pro Terminal

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