Citi Japan says fair value USDJPY 106

From the FXWW Chatroom: “It’s not our base case, but if Donald Trump pulls off a surprise the first reaction of the markets could be messy after pricing out the risks in the past few weeks. This would suddenly trigger a USDJPY decline. However, if the Republicans maintain control of both the Senate and the House of Representatives, the fiscal stimulus policies proposed by Trump, including tax cuts and HIA, will become more realistic. With support to the economy from stronger fiscal policies, the markets will be aware of the latent possibility of the Fed to engage in the normalization of its policy more eagerly. In this case, we believe the downside of USDJPY would be limited at around 102 where the weekly Ichimoku conversion line that is expected to convert to a support from a resistance is presently located. We would not be surprised to see USDJPY reach our earlier mentioned upside target of around 108 before the year end.”
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