Deutsche Securities argue that downside is limited for yen pairs
The firm says that:
"Markets are generally in a phase of confirming the Fed's stance while keeping an eye on price and jobs data as the focus is on inflation worries.The Fed appears to be proceeding with the timing of tapering without bolstering volatility on this key market topic, and this is why G-10 or emerging currencies are all seeing volatility drop significantly."
Adding that in such a market environment, traders will seek gains from interest differentials and Japan's low bond yields is likely to suppress the yen - keeping it pressured.
The US CPI data tomorrow will likely reaffirm what we already know i.e. higher price pressures but across categories which are supposedly deemed to be temporary spikes.
I reckon the view by Deutsche above accounts for that as well but still, the CPI data may produce some short-term and kneejerk reaction so be wary of that.
As for yen pairs, keep an eye on GBP/JPY as well as it threatens a stronger breakout in the bigger picture of things:
