Credit Agricole CIB Research discusses the JPY outlook and sees a scope for USD/JPY to regain some grounds in the near-term.

"It has been a volatile few days for the JPY, with the currency surging on the back China stumbling in its implementation of its 20-point plan to ease Covid restrictions. Newswire headlines recently have been reporting of a demand for safe havens and therefore the JPY as well as the USD. We think positioning was more at work than the JPY actually re-coupling with risk sentiment and becoming the go-to safe haven of investors," CACIB notes. 

"Indeed, the main drivers of USD/JPY are still UST yields as well as the slope of the UST curve, according to our FAST FX model. The model also points to USD/JPY remaining strongly negatively correlated with global equity markets. So higher UST yields on the back of a hawkish Fed would still see USD/JPY head higher and not be dragged lower by weaker global equity markets," CACIB adds.