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Analysts at TD Securities note that USD/JPY has been drifting lower over the last day or two. Spot has been unable to hold on to a 109 handle as rallies have been sold since Monday’s local peak.

Key quotes

“We think USD/JPY downside is starting to look like an attractive proposition if we get a more pronounced pullback in risky assets.”

“On a very short-term basis, the next move may be to re-test the air above 109.25. We think that any rally that does result should be sold, however, and would be somewhat surprised if spot reclaimed a 110 handle for this cycle.”

“Looking lower, we think 108.50 would mark an initial target to the downside. Below this, the objectives are pretty easy to spot, we think, where we could then get a test of 108.20 ahead of 107.80.”