Credit Agricole CIB Research discusses USD/JPY outlook and adopts a neutral bias around current levels.

USD/JPY continues to hover around its estimated short-term fair value of 134.96, according to our FAST FX model. While the FOMC Minutes were hawkish, they were enough to give the USD another leg up. But USD/JPY traders are waiting on two important events on Friday to see if the exchange rate should retreat and continue to push higher: (1) Japan’s CPI reading; and (2) BoJ Governor nominee Kazuo Ueda’s confirmation hearing in the Lower House of Japan’s Diet," CACIB notes. 

"On this front, we note that Ueda has expressed concerns about the functioning of asset markets under the BoJ’s YCC. So Ueda’s confirmation hearing will provide investors with insights on whether or not further adjustment to the 10Y JGB yield target is likely in the coming year," CACIB adds.