Bank of America Global Research discusses USD/JPY outlook and maintains a structural bullish bias and long exposure in spot with a revised target at 117 (from 115).
"We raise the target for our long USD/JPY trade to 117.0: Supportive factors: seasonal rise in energy imports, policy divergence, potential rise in FX hedge in foreign investors' JP equity investment. Technicals see risk of a tactical dip but also a structural uptrend," BofA notes.
"JPY tends to appreciate in risk off only when the trigger is a demand shock that forces the Fed to loosen policies. Supply shocks and inflation pressures today force the Fed to start looking towards policy tightening instead, which is positive for USDJPY as the BoJ remains on hold," BofA adds.