TD Research flags a scope for selling USD/JPY on further rallies in the near-term.
"It's turnaround Tuesday, supporting the reversal. There's probably some merit that the extraordinary actions taken by the Fed and its peers have helped to mitigate some brush fires in the global financial plumbing. That's a critical first step to crisis resolution and yet it's unlikely to offer much solace for risk assets that are dealing with a few exogenous shocks," TD notes.
"The wrangling in DC doesn't help matters but markets are awaiting the size rather than debating if fiscal support is forthcoming. For now, the mini-theme of the day is position squaring, especially ahead of month-end. Equity rebalancing of local pension funds should boost USDJPY but that's likely to offer better levels to sell into the Japanese fiscal yearend," TD adds.