Morgan Stanley Research maintains a neutral bias on JPY in the near-term.

"We remain neutral on JPY. While a deterioration in global risk sentiment, driven by the sell-off in AI-related stocks,  should weigh on USD/JPY, this is likely to be offset by factors that are negative for JPY, including elevated US terminal  rate expectations and a worsening of Japan’s terms of trade amid renewed escalation of Middle East tensions," MS notes.

"As a  result, we expect USD/JPY to remain confined to a relatively narrow range. A more meaningful decline in USD/JPY  would likely require both a sharper deterioration in risk sentiment and a repricing lower in US terminal rate expectations. However, with market attention increasingly focused on US inflation, we view such a scenario as unlikely  in the near term," MS adds.