Morgan Stanley: USD/JPY can break through 105.00 and drop to 98.00

The fundamental basis of trade in the forex market currently remains negative for risky assets. This allows to count on further strengthening of the yen, write analysts at Morgan Stanley. Japan is trying to increase its fiscal stimulus.
The yen strengthened on behalf of cash flows related to hedging or insurance against the risk of unfavorable changes in the exchange rate. Here the difference between real interest rates in the US and Japan, in fact, plays an important role. As well as the set of tools in the arsenal of the Bank of Japan to weaken the yen seems scarce, there is a significant risk that the Japanese currency may strengthen significantly from current levels, they added.
The position of the bank suggests a bullish trend for the yen amid expectations of further reducing appetite for risky assets. The bank believed that the level of 111.50 seems durable and is currently unbreakable resistance.
Currently, the bank analysts expect that the support level at 105.00 on USD/JPY will be breached and the price will head towards the global target of 98.00.
According to them the yen could succeed strengthening before the Bank of Japan begins to review the possibility of progressive monetary and credit policy, which will go beyond the current strategy of quantitative easing.