The market variables that have driven USD/JPY higher have corrected taking the pair with them. Economists at MUFG Bank expect USD/JPY to suffer additional losses if correction in rates and oil is extended.

Pull-back in USD/JPY as US yields and energy correct

“The 2-year UST bond yield correction lower from yesterday’s high (-15bps) is actually the biggest this month while Brent crude oil has also corrected notably.”

“Governor Kuroda did meet with PM Kishida which fuelled speculation of some form of agreement to intervene. But in reality, it is the correction in rates and oil and if that correction is extended, USD/JPY could also correct further lower from here.”