Wells Fargo Group Strategist: Rising Intervention Risks, Tactical Recommendation to Short USD/JPY

Golden Finance reports that Wells Fargo strategists have pointed out that the macro environment is increasingly favorable for Japanese authorities to take intervention measures to support the yen, recommending a tactical short position on USD/JPY in the coming weeks. "The current market environment is quite attractive, with the U.S. approaching the holiday season and USD/JPY long positions being overly crowded. Additionally, recent interactions between U.S. and Japanese officials suggest that the Ministry of Finance and the Bank of Japan have received the green light for intervention," Wells Fargo macro strategist Erik Nelson wrote on Thursday. Wells Fargo recommends selling USD/JPY, targeting a level of 155.80 with a stop-loss set at 163.20. For the dollar to strengthen further, "the Federal Reserve would need to hike rates in July, which we believe is a very high threshold," Nelson said. (Bloomberg)