MUFG Research maintains a bullish bias on JPY over the medium-term.
"We certainly see the recent performance of USD/JPY as strongly indicating increased JPY support. The breach of the 104-level during the first phase of the COVID crisis in March was very fleeting with a strong rebound. However, the strong rebound from below 104 earlier this month has reversed rapidly – the market now is considerably more comfortable with lower levels," MUFG notes.
"USD/JPY has recorded lower highs every month since June. We still expect declines to be met with good Japanese investor USD demand but that demand is set to come in at lower levels than before. The steady grind toward the 100-level continues," MUFG adds.