TD Research discusses USD/JPY outlook and thinks that shorts around current levels look like a cheap hedge for another risk-off episode
"At this point, push (risk-off) and pull (patient Fed) factors for gold may leave the market in search for a cleaner hedge at this particular point in time. This brings the safe havens back to the fore," TD notes.
"Both CHF and JPY have been uninspiring this month. This could change however. We previously called a tactical USDJPY move lower last month following dismal ISMs.
We think it is worth considering a (cheap) hedge at this point, particularly given the decline in vols. For the most part, the pair has broadly been mired in a 107/109 range since June. Technically, the pair looks to be forming a reverse head and shoulders, with the 200dma located at 109 offering a crucial blockade for now," TD adds.