We see limits to the extent of Yen selling that can take place from here. Of course, there are greater USD/JPY upside risks over the very short term given this risk event has now passed without any major hawkish surprise and if the FOMC on Wednesday were to drop a DOT in its policy rate profile, US yields will likely jump further and potentially drag USD/JPY to intervention levels. 

But over the medium term, we view today’s announcements as hugely significant that is consistent with higher yields and a stronger Yen.