FXStreet (Delhi) – Taisuke Tanaka, Research Analyst at Deutsche Bank, suggests that a hike in US interest rates has already been discounted by the market, and the USD/JPY is therefore unlikely to simply exhibit a bullish reaction. Key Quotes “The differences in projected monetary policy between the US and Europe and the US and Japan in 2016 suggest a downtrend in the EUR/USD and an uptrend in the USD/JPY. However, as a result of excessive expectations by the market ahead of the ECB's decision to extend monetary easing last week, the EUR/USD's first reaction following the announcement was a sharp rebound. Many EUR bears’ positions were damaged, and the EUR/USD may for some period become less sensitive to expectations of a US rate hike next week.” “Following the announcement of firm US employment data on 4 December, a rate hike by the Fed on 16 December is now also almost factored in. It is therefore no longer possible to forecast a definite bullish reaction by the USD/JPY, which is tied to US monetary policy.” “However, in coming some months, we expect the EUR/USD to decline below parity and the USD/JPY to rise to high-120’s. As a result, we remain of the view that steadily dip-buying of the USD against the EUR and JPY will stay as an effective tactics.” For more information, read our latest forex news.