USD/JPY: Higher yields overseas weighing on the yen - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, expect the USD/JPY pair to remain neutral next week, moving in the 103.00 - 105.00 range. 

Key Quotes: 

“The recent rise in USD/JPY has been driven mostly by USD strengthening. JPY selling pressure has been fairly weak. Overall USD long positions are at a recent high. USD/JPY may rise above 105 over the near-term, but topside may be heavy at around 105.50 due to the weakness of JPY selling.”

“We expect the BoJ to keep monetary policy settings intact next week. Board members must confirm the progress with controlling and managing the JPY yield curve. They have to make consensus for the reality of JPY yield curve control, JGB purchase to taper further. Most Japanese investors, especially pensions and lifers, want the JPY yield curve to normalize, since a too-flat curve hurts their investment performance and revenue. At this stage, investors are unlikely to take bold risks.”