The recent spike in risk aversion only saw limited flows into the safe-haven yen.
Last week's Nikkei 225 index drop to 20,971.93 has not spilled into this week, giving USD/JPY speculative accounts a chance to take spot higher.
Recall the large speculative USD/JPY long position was trimmed last week, giving bulls room to maneuver this market higher.
IMM data for the week ending Oct.
23 showed a futures market long an equivalent cash USD/JPY position of $10.3 billion, edging down from $11.2 billion the previous week.
EBS flow data suggest that USD/JPY longs since Oct.
23 have been trimmed further.
The recovery from last Thursday's 111.38 low is now focused on the 112.97 Fibonacci level, a 50 percent retrace of the 114.55 to 111.38 (EBS) October fall, a break and daily close above which will accelerate much higher.
USD/JPY, on Friday, failed to close below the daily cloud and 111.60, a 61.8 percent retrace of the 109.78 to 114.55 (EBS) rise -- meaning the risk of a squeeze higher grows.