BTMU FX Strategy Research notes that the JPY has remained at stronger levels after strengthening sharply yesterday in response to building US political risks which triggered the largest daily sell off for the US equity market since September of last year.
In that regard, BTMU thinks that the latest US political developments have prompted a more ‘serious reassessment’ of the potential downside risks ahead.
“At the very least the latest developments should help to dampen the scope for the yen to weaken much further against the US dollar in the near-term.
According to our long-term valuation model estimates, USD/JPY is already significantly overvalued,” BTMU argues.
USD/JPY is trading circa 111.10 as of writing.
Source: BTMU Research
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