MUFG Research discusses USD/JPY outlook and sees the pair in tight range with a downside tilt through 105 level by year-end.
"With the global economy and global yields set to move higher relative to Japan, on a trade-weighted basis at least, the yen should weaken further. But a factor that is likely to limit yen depreciation over the medium term remains the relative attractiveness of real yields in Japan. The inability of the BoJ to implement further notable monetary easing leaves inflation expectations more subdued in Japan," MUFG notes.
"USD/JPY is likely to move in a tighter range than other G10 currencies reflecting offsetting forces on current account and capital account flows and assuming a gradual rather than a sharp move higher in global yields," MUFG adds.