Analysts at Bank of Tokyo Mitsubishi explained that market expectations for expanded fiscal spending in the US have diminished and US Treasury yields have fallen following speeches by the outgoing and incoming presidents this week.
"This in turn has driven USD/JPY to the 114 level.
Japanese investors have begun their usual seasonal cash repatriation.
Japan has reported current and trade account surpluses, which could weigh heavily on USD/JPY topside at around 116. But the US-Japan yield gap would theoretically keep the lower bound at around 113-114.
The lower bound could also be supported by JPY selling pressure triggered by FX exposure to reduce hedge trading, as well as by reflationary momentum still above the make-or-break mark of 50 according to the Economy Watchers Report.