Nomura: USD/JPY Bearish in the Short Term, but Downside Appears Limited
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Nomura maintains a near-term bearish outlook on the USD/JPY currency pair, though the firm cautions that any immediate downside remains capped. The report highlights the fundamental contrast between a hawkish Federal Reserve and an accommodative Bank of Japan. However, Nomura notes that the broader market has already partially priced in this policy divergence, effectively limiting the potential for further yen appreciation in the immediate term.
The Japanese brokerage forecasts that the currency pair will likely trade within a defined range of 108 to 112. Nomura sets a short-term target of 110 for the exchange rate. Several underlying factors are expected to sustain this range-bound behavior. While interest rate differentials continue to structurally support the US dollar, any broader improvements in global risk appetite could further restrict the yen's upward momentum. Simultaneously, Japanese exporter selling pressure is anticipated to establish a firm resistance level near the 112 threshold.
Ultimately, the combination of an accommodative central bank and steady interest rate spreads suggests that significant yen strength remains constrained. Nomura did not specify any distinct future validation points or precise time windows beyond this short-term horizon.