(Bloomberg) -- Fund managers are warming to the idea of the yen strengthening as far as 100 per dollar, but only if there’s a global economic downturn.

The yen started the year with a bang, rallying close to 4 percent versus the dollar in a flash move in thin holiday trading last week, and the market sees room for further gains. Deutsche Bank AG has issued a year-end target of 100 per dollar, a level last touched in 2016, while Russell Investments Ltd and Credit Agricole SA see that reached in 2020.

Here’s where fund managers and strategists see the yen going:

Deutsche Bank

• The bank is keeping its short USD/JPY recommendation and betting the yen could hit the 100 mark this year.
• “While the flash crash move has largely been faded, we think the drivers of yen strength go far beyond this,” write strategists including George Saravelos in a research note.
  • “A structural shift in Japanese investor behavior -- from repatriation to increasing hedges -- will support the JPY this year.”
  • The bank estimates fair value for the yen near 100.

Russell Investments

• “If there’s a severe slowdown in the U.S. economy and the market sniffs out the Fed’s interest rate peak, 100 would be very attainable,” said Van Luu, head of currency and fixed-income research at the firm.
  • However, he sees this as more likely to play out in 2020, with recession risk more elevated for next year.
• The asset manager has a large overweight on the yen versus other Group-of-10 currencies in its multi asset funds.
• Russell Investments targets 102 by year-end.

Investec Asset Management

• 100 is “a huge level,” according to portfolio manager Russell Silberston, as it marks the highs seen in the 2016 risk-off scare.
  • “I suspect to breach it in the short term, we need to see a much bigger market panic or unilateral monetary action from the Bank of Japan, both of which seem unlikely to me.”
• “The first test will be the recent highs around 105. If this is broken on a sustained basis, then an attack on 100 becomes more likely on a pure technical analysis view.”

Janus Henderson Investors

• “The next level that I’m watching is 108, and any consistent close below that,” said fund manager Ryan Myerberg.
  • Myerberg added he started the year thinking 110 would be the level to watch and “that level didn’t last long”.
• “In a global growth slowdown, Fed cutting rates, volatility increasing type of world and with a currency as fundamentally cheap as Japanese yen, 100 doesn’t seem like a stretch.”

Credit Agricole SA

• “Our long-term forecast for the yen is indeed that dollar-yen should revisit 100 by 2020,” said head of G-10 currency strategy Valentin Marinov.
• “This will be driven by policy convergence, the unwinding of Japanese-yen-funded carry trades and the correction of yen significant undervaluation.”
  • The dollar-yen should be trading closer to or even below the 100 level, he said.

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