Goldman Sachs: Assessing the upward trajectory of USD/JPY and its outlook

<p>Goldman Sachs weighs in on the trajectory of the USD/JPY currency pair, focusing on its correlation with US yields and the potential risks and factors influencing its direction.</p><p>Key Insights:</p><ol><li><p>Yen's Usual Behaviour: Historically, even in the absence of a surge in US yields, the yen typically weakens when risk remains relatively supported. This trend aligns with a sustained US growth scenario, even as there's a continuation in disinflation despite rising international concerns.</p></li><li><p>Spillover Concerns: The bank acknowledges the escalating risk of economic spillover, which can affect currency trends.</p></li><li><p>Short-Term Tactical View: Goldman Sachs recognizes the potential for a slight fading in the recent fixed income sell-off. This might allow the USD/JPY to slightly dip in the short-term.</p></li><li><p>Medium-Term Outlook: However, when taking a broader lens, the expectation is that US interest rates will predominantly stay elevated for an extended period.</p></li></ol><p>Conclusion: Goldman Sachs acknowledges that considering these factors, there could be upward risks to their current 3-month forecast for the USD/JPY, which pegs the cross at 140. The bank's stance revolves around the interplay between US yields, economic risks, and sustained US growth.</p><p>For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1692715447021000&amp;usg=AOvVaw1G37lc99yP_HasJoNE88gT">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1692715447021000&amp;usg=AOvVaw1G37lc99yP_HasJoNE88gT">Get it here</a>.

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This article was written by Adam Button at www.forexlive.com.