Jane Foley, Senior FX Strategist at Rabobank, thinks that there is a risk that USD/JPY will dip to 107 on a one-month view before returning to firmer levels later in the year. 

Key quotes

"Even though the safe haven JPY is the worst-performing G10 currency in the year to date, it is the best performer on a 5-day view as Covid related news in the Asian region destabilizes risk appetite." 

"Last month’s monetary policy review has provided the BoJ will a little more flexibility on its activities. There would appear to be little risk that policymakers will not continue to pursue ultra-accommodative policy measures for the foreseeable future."

"Despite the current optimism about the outlook for economic recovery in the Eurozone, the UK and the US, it is clear that the good news is not evenly spread. We continue to see risk that another burst of concern about the outlook for inflation in the US will enhance the outlook for the USD in the coming months and we maintain the expectation of choppy conditions in FX majors. That said, based on the current newsflow from Asia we have revised up our forecasts for the safe haven JPY. We see risk that USD/JPY will dip to 107 on a 1 mth view before returning to firmer levels later in the year." 

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