Danske Research discusses USD/JPY and EUR/JPY outlook and maintains a structural bearish bias on the 2 pairs in the medium-term.

"In the past two weeks, USD/JPY has moved from low 105s to around 107.5 and markets have been unwinding hedges across the board. We remain reluctant, however, to extrapolate the momentum. Ironically, stabilising markets may be just what tips Fed in a more hawkish direction next week. On trade, optimism has been brewing for the October meeting but nothing is tangible as of yet. We view tail risk as elevated going into the coming weeks and maintain our view that USD/JPY and EUR/JPY remain in a downtrend," Danske adds.