Forex Flash: USD/JPY still on course for 1m/3m target of 95.00 – UBS

The USD/JPY traded lower overnight amid reports that Toshiro Muto is the leading candidate to succeed BoJ Governor Shirakawa when his resignation takes effect on March 19th. According to Research Analyst Gareth Berry at UBS, “Market perceptions are that candidates such as Iwata or Kuroda would be more willing to take a radical approach to policy easing, and so the potential appointment of Muto would likely disappoint yen bears.”

Adding to the downside pressure on the USD/JPY, nervousness persists about the outcome of the G20 meeting, which begins today and continues into Saturday. “We continue to believe that Japan is likely to escape formal censure in the community - especially given the benign G7 statement earlier this week. As such, we think the overnight nervousness will be short-lived and we maintain our 1m and 3m USD/JPY forecasts at 95.00.” Berry adds.