Citigroup highlighted the key support level for the Japanese yen against the US dollar, noting that the pair maintained its position above the 152 level.
This level was previously identified as an important resistance point throughout 2022 and early 2023, and served as a crucial breakout area in 2024. Additionally, the 200-day moving average (200dma) is below this threshold at 151.54.
The firm noted that stronger-than-expected US GDP and core PCE numbers released today, coupled with their expectations of a hawkish Fed and no policy change from the Bank of Japan (BoJ), present an attractive risk/reward scenario for investors considering tactical long positions in USD/JPY ahead of next week.
Citi explained that this recommendation is tactical in nature, given its broader outlook for a risk-off environment with increased volatility over the coming months. It noted that while high volatility could lead to aggressive counter-trend moves, it is also an opportunity to capitalize on.
Looking ahead, Citi expects better opportunities to sell USD/JPY, which may arise soon. They speculate that a rise to the 55-day moving average (55dma), which stands at 157.75, could provide attractive selling levels if achieved.
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