MUFG Research discusses the JPY outlook with its USD/JPY short exposure is under water.

"The yen has continued to weaken sharply at the start of this week following the BoJ’s dovish policy update on Friday. It has resulted in USD/JPY rising back above resistance from the 200-day moving average that comes in at around the 137.00-level to an intra-day high overnight at 137.77. It moves the pair back within touching distance of the high from 8th March at 137.91 which if broken would open the door to the move extending back towards the 140.00-level," MUFG notes. 

"The latest developments clearly pose downside risks to our outlook for the yen to strengthen from deeply undervalued levels in the year ahead. However, we still believe there is room for the BoJ to adjust/abandon YCC this year especially if global yields continue to fall in response to slowing global growth and falling inflation that opens the door for other major central banks to first pause and then consider reversing rate hikes later this year," MUFG adds.