Wells Fargo Recommends Short USD/JPY to 155.80 Amid Rising Intervention Risk

USDJPY-1.02%
According to Wells Fargo macro strategist Erik Nelson on Thursday, July 2, the macro environment is increasingly favorable for Japanese authorities to intervene and support the yen, prompting a recommendation to tactically short USD/JPY in the coming weeks. Nelson cited an attractive market setup with the U.S. approaching holidays, crowded long positions in the pair, and recent official interactions suggesting Japan's Finance Ministry and Bank of Japan have received the green light to intervene. The bank recommends selling USD/JPY with a target of 155.80 and a stop loss at 163.20. For the dollar to strengthen further, "the Federal Reserve would need to hike in July, a threshold we see as very high," Nelson noted.
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