We have stressed multiple times how a sustainable rally in the Yen relied more on a decline in US rates than a BoJ rate hike. We may be observing the symptoms of this dynamic particularly well now, with the jump in Treasury yields on Thursday reasonably discouraging long-JPY positions. This is not just obvious in USD/JPY, but also in other crosses like EUR/JPY, which is still trading around 161.50. 

We remain of the view that the Yen will struggle to trade on the strong side outside of volatility around a rate hike until USD rates move lower (which remains our base case for later this year).