USD/JPY: Merrill Lynch recommends selling on rallies and believes 110 to be a realistic target

USD/JPY is displaying a temporary rebound, but we may touch 100 before the pair finds a bottom. The month of February was a memorable one for the JPY. The USD/JPY displayed greater movement than it did during all of 2015. We believe that risk is increasing for the JPY. Sell USD/JPY rallies. However, all things considered, 2016 may especially prove to be a good opportunity to sell the JPY. But this will require a stronger decrease of the risk sentiment and a higher JPY price level.

110 is a realistic downward goal and 100 could also be reached if the yuan depreciates, if US growth slows and if political risks increase," says Merrill Lynch.