MUFG Research discusses USD/JPY tactical outlook and maintains a neutral bias, expecting the pair to trade sideways in 104.50-107.50 range in the near-term.
"USD/JPY moved as sentiment regarding the US-China trade war changed but stayed at the 105-106 level. Market sentiment persists about another US Fed rate cut and more monetary easing by the Bank of Japan. Monetary policy officials are divided on further easing, but there are strong expectations that some sort of policy will be implemented to address the downside economic risk going forward," MUFG notes.
"Despite strong JPY selling flows by investors, companies are also buying large amounts of JPY. USD/JPY will likely remain range bound. It is unlikely that the BoJ’s September JGB buying plans will have a big impact on the direction of USD/JPY," MUFG adds.