Credit Agricole CIB Research maintains a bullish bias on USD/JPY and expects another test of Japan MoF's resolve.
"USD/JPY has rallied to its highest level since the BoJ’s intervention on 22 September. US labour market data and higher UST yields have given the exchange rate no reason to back off. Indeed, our FAST FX model increased the short-term fair value for USD/JPY from 146.75 to 149.33. Investors remain hesitant to test the MoF’s resolve, however, even though today was a Tokyo holiday," CACIB notes.
"We remain of the view that strong US data will lead to another test of the MoF’s resolve to hold USD/JPY down and below its fair value. This week’s US CPI data release could be the MoF’s biggest test yet," CACIB adds.