USD/JPY: Bullish bias, likely to reach 120.00 - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, see the USD/JPY pair eyeing a full reversal of the move lower from early this year, moving back towards the 120.00 region. 

Key Quotes: 

“USD/JPY surged to the 117 level from 115 after the FRB raised the US policy rate at the December FOMC meeting last night. The dots illustrate expected Fed rate hikes in 2017. USD/JPY has been especially sensitive to changes in the US-Japan yield gap recently. JPY selling may pick up even further.”

“However, the USD rally may cool toward the end of the year as USD supply/demand may not tighten, despite liquidity constraints. The BoJ may not alter monetary policy next week, as the December Tankan survey showed positive business sentiment. JPY buying among exporters may not be so strong after the sharp rise in USD/JPY.”