BofA recommends switch from buying AUD/JPY to USD/JPY amid geopolitical risks

Published 20/06/2025, 10:36
© Reuters.

Investing.com - Bank of America has recommended investors switch from AUD/JPY to USD/JPY positions, citing heightened geopolitical risks and Japan’s vulnerability to Middle East tensions.

The bank closed its AUD/JPY long recommendation at 94.18, which it had opened at 92.8 on May 28, 2025, and now suggests buying USD/JPY at a reference point of 145.25 with a target of 152.0 and a stop loss at 142.0.

BofA analysts highlighted that USD/JPY works effectively as a hedge against escalation in Middle East geopolitical tensions while offering positive carry, noting that the U.S. is largely energy-independent while Japan imports almost all of its petroleum needs with more than 90% coming from the Middle East.

The bank pointed out that USD/JPY can reprice higher if oil prices remain elevated, while AUD/JPY may be vulnerable to risk-off sentiment induced by geopolitical concerns, with AUD/JPY showing an even higher correlation with the S&P 500 than AUD/USD.

BofA maintained its long position on EUR/JPY as a structural trade, referencing its March 25, 2025 report on flows and trades for Japan’s new fiscal year, while citing potential catalysts for risk-off moves including geopolitical escalation and the resumption of reciprocal tariffs.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.