Goldman Sachs Research shifts to a more bullish bias on the JPY.

"For years, domestic policies and the global backdrop justified the Yen's undervaluation. Now, domestic policies seem to be turning more constructive, with scope for more to come. Faster rate hikes have reduced the inflationary impact of expansionary fiscal policy, taking pressure off the currency. A shift in portfolio flows remains mostly speculation so far, but the higher probability of it occurring increases the downside asymmetry in USD/JPY on top of the Yen's valuation signal, strengthening its attractiveness as a portfolio hedge," GS notes.

"The risk of additional interventions, particularly in the context of the US and Japan's reported joint concern about the Yen's undervaluation, should also keep the upside in USD/JPY more limited. Together, these developments raise the attractiveness of being long JPY, especially to protect against an onset of recession fears, and should make valuation a more meaningful driver of performance," GS adds.