MUFG Research discusses the current market conditions and likes short USD/JPY targeting a move towards 129.00.

"The broader financial markets have seen some increased volatility with risk assets underperforming as risk aversion intensifies in response to the emerging signs of stress in the markets as US yields march higher," MUFG notes. 

"This mix has resulted in a pre-inflation shock common trading performance in G10 with the core G10 of CHF, EUR and JPY outperforming the other higher-beta G10 currencies. While a shock upside surprise in CPI next week could bring back the chance of a 50bp hike from the FOMC later this month, we maintain our previous view of a 25bp hike which coupled with a possible further increase in risk aversion could see JPY and core G10 outperform further," MUFG adds.