NAB FX Strategy Research notes that USD/JPY is currently trading around 3 big figures higher relative to the 108.21 lows reached on 17 April.
In particular, NAB notes that the recent rebound in the pair was originally fuelled by an ease in geopolitical and global trade concerns and was then boosted by a market-friendly first round French election result, and the release of Trump's tax plan this week.
Looking ahead, NAB argues that while many supportive factors for USD/JPY are in place, the pair is not yet out of the woods yet on the back of vulnerability to adverse US trade/fiscal policy announcements remains high.
That said, looking over the coming months, NAB still hold the view that geopolitical tensions and trade concerns will not escalate into extreme levels, expects the US economy to remain in good health, looks for 2 more Fed hikes this year, and sees 10y UST yields ending 2017 around 2.75%.
"Give this expected backdrop, we remain comfortable with our profile for USD/JPY at 114 in June 17 and 118 in December 17," NAB projects.
USD/JPY is trading circa 111.20 as of writing.
Source: NAB ResearchOriginal Article
