Credit Agricole CIB Research discusses USD/JPY outlook and maintains a bullish and long exposure in spot.
"While political wrangling and the timing of the general election will be important for USD/JPY vol, we think the direction of the exchange rate will continue to be strongly driven by UST yields. Our rates strategists continue to look for higher UST yields in the coming months as the Fed begins to taper its asset purchases, which in our view will drive USD/JPY higher and towards 115 by year-end," CACIB notes.
"In the near term, technical resistance around the 110.20/30 level needs to be cleared to open up a more extended rally in the exchange rate. US non-farm payrolls data this Friday will likely be the determining factors on this front," CACIB adds.