Barclays Research discusses USD/JPY outlook and targets the pair at 105 in Q3,and 104 in Q4.
"While JPY could face downward pressures in the near term amid the positive risk dynamics, especially in cross-JPY, we expect USDJPY to remain under some downward pressures in the second half of this year," Barclays notes.
"First, risk-adjusted return of JPY improved due to its safe-haven currency status (ie, lower risk) and the global low-for-long yield environment (relatively higher return). Second, JPY is poised to attract greater safe-haven demand diverted from the USD if its perceived risk increases with US election uncertainty. Third, the increasingly cautious outward investment stance by both corporates (M&A) and investors (FX-unhedged portfolio flows) is likely to increase downside vulnerability of USDJPY," Barclays adds.