The Japanese yen may resume decline
The price of the Japanese yen strengthened against the background of a sharp fall in the stock markets of China and the rising tensions in the Middle East due to the breaking of diplomatic relations between Saudi Arabia and Iran. This fact increases the interest in the defensive assets, but it is worth noting that similar situations have traditionally a short-term influence on the course of trading and, according to our estimates, the strengthening of the US dollar and the loose monetary policy of the Bank of Japan will lead to a resumption of growth of the price of USD/JPY with the targets at 121.50, 122.30 and 123.60. Our medium-term outlook for the Japanese yen remains negative and we recommend accumulating long positions.
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