This will likely not change over the few next days, as Thanksgiving and Black Friday are next week, reducing the chances of risk on/off driven moves in yield and currencies, especially in the JPY.
But recent fundamental developments left us with excitement in regards to the coming weeks, and has made the USD/JPY an exciting currency pair to analyse in our opinion.
With the Fed's expanding at an increasingly faster rate than during QE1, QE2 or QE3, 10-year-US-Treasury yields losing their momentum from the first two weeks of November, and rumours making rounds that the mood in Beijing about a trade deal is rather pessimistic (meaning, tensions between the US and China may be rising again), the USD/JPY bears are probably smelling a kind of advantage in the near-term.
It is speculated that China is getting more and more troubled after repeated signs that no tariff rollback seems to be coming soon (which especially China thought both economies had agreed on in principle), as the strategy switches to "talk only," and wait due to the recent impeachment developments around Trump.
In fact, this development is not a big surprise to us (as pointed out for example in one of our last weekly market outlooks), but reinforces our sceptical view of the USD/JPY in general.
That said, we still consider the Short-side in the USD/JPY to be more attractive from a risk-reward perspective, and don't see the recent spikes above 109.00/30 as sustainable, but instead to be potential fake-outs, resulting in the USD/JPY going for another stint to the region around 107.80/108.00.
Still, given our expectation around a subdued outlook, we don't expect an aggressive attack at the region around 106.80/107.00, at least not for now respectively into the yearly close which would definitely increase chances of a sharper drop from a technical perspective as low as 105.00 and probably even lower.
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