NAB Research discusses USD/JPY outlook and adopts a neutral bias in the near-term, expecting the pair to continue to trade largely confined around 110/112 handle in the near-term.
"As long as global growth uncertainties remain in place, it is hard to see USD/JPY making its way back above ¥114 any time soon. That said with YCC still in place, 10y UST yields are still an important driver for the pair," NAB notes.
"We think 10Y UST yields are now trading close to the lower end of their likely 2019 trading range, suggesting USD/JPY has limited downside. US China trade talks are another important risk/JPY factor. Recent mood music from negotiations is encouraging, but a trade truce still looks more likely in May rather than April. We suspect USD/JPY will continue to trade largely inside ¥110-¥112 in coming weeks," NAB adds.