Credit Agricole CIB Research discusses the JPY near-term outlook.

"The JPY would be one of the G10 currencies to benefit most from an unwinding of the AI boom in equities. While the Nikkei has been a big beneficiary of the AI boom, there remains a strong negative correlation between the JPY and the Japanese bourse. Weaker Japan equities would cause foreign investors to experience falls in their exposures to JPY-denominated assets and lead to the unwinding of FX hedges," CACIB notes.

"USD/JPY would also be weighed down by weaker US technology stocks given a lot of the USD’s strength is tied to capital inflows into US equities. Continuing to drive the JPY in the background is the BoJ still moving to normalise rates. We still think this will be more of a neutral for USD/JPY than a negative, with the BoJ to only match the pace of Fed rate hikes," CACIB adds.