USD/JPY remains a ‘buy on dips’ opportunity – Westpac

FXStreet (Barcelona) - Analysts at Westpac believe that USD/JPY will continue to be driven by risk sentiments and expectations of a Fed policy hike, further suggesting that the ‘buy-on-dips’ opportunity still remains for the pair.

Key Quotes

“Financial press has started to flag a potential revision to CPI forecasts. Key for FX will be the extent to which we are given any guidance in the statement, though we would expect that the board will be wary of the potential negative impact of hinting too much here outside of the April semi-annual.”

“If anything, we expect to see a factual ‘likely to remain weak for some time’ rather than ‘around the current level for the time being’ reference to CPI seen in December . That is clearly not going to be enough to drive the ¥ sharply lower near term, so USD/JPY will continue to be driven by risk sentiment and expectations of Fed policy.”

“We continue to see USD/JPY as a buy on dips, but we would revise down our 116/118 buy area to 115/116.”