AUD/JPY: Citibank recommends traders buy this week, targeting 89.85

"We recommend buying AUD/JPY this week.

Positioning appears light on the pair, and traders should be able to add shorts on the JPY by the BoJ meeting. Our economists expect the BoJ to once again ease its monetary policy. The nature of the easing remains uncertain. An increase in the balance sheet or a rate cut both have the power to bring down the yen. The JPY also seems to be an attractive sell due to the surrounding risk sentiment.

AUD was supported by a resilient risk sentiment despite stagnant commodity prices. The PBOC's monetary easing last week and speculation about new tax measures should support the AUD. In order for the AUD to fall back, a fall in inflation would be required, which would strengthen expectations of monetary easing by the RBA." says Citi.

Citi therefore recommends buying the AUD/JPY at 87.72 with a stop loss at 86.40 and a target of 89.85.