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Analysts at Scotiabank explained that the JPY remains well supported, trading just below its recent high as the constructive market tone offsets the recent bullish shift in fundamentals.

Key Quotes:

“All eyes are on the BoJ as market participants consider potential tweaks to the yield curve control policy and specifically the 0% target on the 10Y JGB yield.”

“No changes are expected at next week’s meeting, however policymakers may lay the groundwork for modifications later this year (at either the September or October meetings).”

“Bearish speculative positioning leaves JPY vulnerable to adjustment and risk reversals already reflect a considerable rise in the premium for protection against JPY strength vs. both the USD and EUR.”