Forex Flash: A short term peak in USD/JPY? - ANZ

FXstreet.com (Barcelona) - There are signs that a (short-term) peak in USDJPY is likely in place, says Richard Yetsenga, Head of Global Markets Research at ANZ, who expects "weakness in currencies in Asia, and the AUD, likely to reverse..."

Key factors making the analyst believe that USDJPY has peaked for now, are: "USDJPY has moved well beyond any fundamental or valuation measures (such as rate differentials or measures of money supply), suggesting a significant degree of extrapolation in the move, the G20 at the end of the week is likely to see some discussions on currencies, which could make yen shorts nervous, and lastly, daily technicals suggest momentum has turned for now."

For the correction in USDJPY to gather steam, however, Richard notes one of the following scenarios should materialize: "(a) some genuine and co-ordinated pressure on Japan at this week's G20 meeting - unlikely - , (b) the eventual choices for the soon to be vacant BOJ governor and deputy governor positions will need to disappoint the expectations for radical policy easing that are now priced into USDJPY - not close enough to the March 19 deadline for this to feature. (c) or, global risk aversion to escalate meaningfully - a full-scale reversal is not expected..."