Citibank: USD/JPY will be traded at 74.00 level

On Monday (August 22nd) in Asian market, USD/JPY was traded on the 76.80 line. In the early days, the yen experienced a sharp fluctuation, rising rapidly from the 76.65 line to the near two-week high of 77.15. Traders said, Rumors about a U.S. bank that is buying have triggered an uptrend. Citibank said it expects USD/JPY to trade at the 74.00 level.

Osamu Takashima, Japan's chief currency strategist at Citibank, said the USD/JPY may be trading within the range of 76.30-77.30, buoyed by short-term investor Yen selling.

In the Nikkei News, Japan may be able to participate in market intervention without other central banks’ interventions, and short-covering of the USD/JPY may emerge, which will inhibit the yen’s gains.

He pointed out that despite this, the USD/JPY is still facing continued downward pressure. The reason is that the idea that the margin trader shorts the USD/JPY is entrenched on the rallies, and that Japanese exporters sold USD/JPY before the first half of the fiscal year ended in September to suppress the exchange rate.

He also pointed out that, further, considering the recent decline in short-term Japanese bond yields, a simple model suggests that USD/JPY should be traded at the 74.00 level.

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