Citi highlighted the Japanese yen as a major support level against the US dollar, noting that the currency pair maintained its position above the 152 level.
This level was previously identified as a significant resistance point in 2022 and early 2023 and represented a key breakout area in 2024. Furthermore, the 200-day moving average (200dma) is trading just below this threshold at 151.54.
The firm noted that higher-than-expected US GDP and core consumer spending (PCE) data released today, coupled with expectations of an aggressive Federal Reserve and no change in Bank of Japan (BoJ) policy, present an attractive risk-reward scenario for traders considering tactical longs in the USDJPY pair next week.
Citi explained that this recommendation is tactical in nature, given their broader expectations of a risk-averse environment with increased volatility in the coming months. They suggest that while high volatility could lead to aggressive counter-trend moves, it is also an opportunity to capitalize on.
Looking ahead, Citi sees better selling opportunities for USDJPY coming soon, speculating that a rally to the 55-day moving average (55dma) of 157.75 could offer attractive selling levels if it materializes.
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