SocGen expects 109.80/115.20 range to hold
From SocGen:
After a vertiginous fall, the USD/JPY tested its 111 support three times and remained capped at 115, forming a new consolidation phase.
Fed and BoJ won't rock the boat near term: The net effect of the quasi simultaneity of the Fed and BoJ meetings (27 and 28 April) should essentially preserve the USD/JPY range, although a cluster of realised volatility is unlikely to be avoided in that period.
Fed. The next two FOMC meetings are on 27 April and 15 June, with the former only six weeks after the March meeting. After having cut two hikes from the dot plot and revised the growth outlook downwards, the board is unlikely to alter its call. The June meeting clearly bears more uncertainty, and is therefore more likely to shake the USD/JPY consolidation only later on.
BoJ. After having introduced negative rates at end-January, the bank of Japan is also unlikely to rock the boat on 28 April. Importantly, the FX market already has discounted that the central bank now has limited credibility to weaken the yen. It expressed its distrust through the USD/JPY break, which closely followed the January policy action. The BoJ is unlikely to either impress or disappoint the market.
Buy USD/JPY 2m double-no-touch, knock-out 109.80/115.20.
Trade risks: USD/JPY breaking its range within 2 months. Investors buying a double-notouch cannot lose more than the premium initially paid. However, the option is knocked-out if the USD/JPY touches 109.80 or 115.20 at any time before the 2m expiry.
