USD/JPY: JPY vulnerable to continued adjustment - Scotiabank

Analysts at Scotiabank explained that JPY was entering Monday’s NA session with a modest 0.2% gain, outperforming all of the G10 currencies with the exception of AUD and NZD.

Key Quotes:

"Domestic political developments are in focus as market participants consider a scandal involving Finance Minister Aso and Prime Minister Abe."

"Sentiment remains dominant and risk reversals are showing a remarkable decline in the premium for protection against JPY strength vs. both the USD and EUR."

"Bearish positioning remains extended however, leaving JPY vulnerable to continued adjustment."