eFX convey Goldman Sachs on 3 reasons why they are hesitant to turn outright bullish on USD/JPY.

  • "First, while it has a unique sensitivity to long-end rates, the Yen will benefit with other G10 crosses if US front-end rates converge toward our dovish Fed call. Second, speculative traders have turned net short JPY, and we have not seen evidence that bond outflows from Japan are materially picking up," GS notes.
  • "Third, JPY appears about 14% undervalued relative to our GSDEER-implied long-run estimate of "fair value," and the TWI is at low levels relative to history," GS adds.

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