The yen jumped earlier this week as investors sought a safe store of value, and it remains steady after pulling back nL8N29Y26Z.
USD/JPY plunged to a 108.73 EBS low on Monday on concern over the spread of the China coronavirus, but bids quickly returned and some players now suspect Japan's giant GPIF "whale" might have been involved nL1N29Y019.
USD/JPY implied volatility and JPY call risk- reversal premium are off highs, showing dealers are less wary of deeper USD/JPY drop.
The technical structure of the market also seems to be a prop.
The daily cloud, now spanning 108.81-109.13, is providing important support.
Spot broke the cloud base on Monday and Tuesday but failed to register a daily close below.
If USD/JPY manages to break and close above both the 109.33 Fibo, a 38.2% retrace of the 110.30-108.73 drop, and the 30-DMA at 109.34, that would be very bullish sign.
USD/JPY would probably take EUR/JPY with it -- the correlation between the two pairs is high.