MUFG Research discusses USD/JPY outlook and adopts a tactical bullish bias, expecting 113 test in the near-term.
"USDJPY has risen. There has been substantial JPY selling against other currencies since end-June, with JPY weakening against EUR in particular. This is due to Japanese investors’ currency hedging rates returning to normal. USD has weakened so far in July but has started to rally again the last few days.
All eyes will be on developments with US-China trade friction for the time being. But any extreme changes are unlikely, given that there are few benefits to be had for either side. Both corporates and investors are standing firm and being judicious.
We anticipate Japanese outward investment flows to push USDJPY higher," MUFG argues.