Citigroup Suggests Dollar-Yen Bullish Spread Before BOJ Meeting

Citigroup currency strategists recommended a dollar-yen bullish spread ahead of the Bank of Japan's (BOJ) policy meeting. Analysts noted that the sharp sell-off in the pair's recent session could signal Tokyo's official intervention. The dollar-yen exchange rate fell by 2.5% to 159.40. Citigroup's senior strategist, Daniel Tobon, expects the BOJ will fall short of market expectations, which could lead to a short-term rally in the pair. The 1-month bullish spread strategy targets a profit if the rate reaches 160.50, with maximum gains at 162.

If the BOJ misses expectations, the dollar-yen pair could see a short-term recovery followed by an upward move. This could signal a new phase in Japan's liquidity policies.