MUFG Research flags further upside for JPY in the near-term.

"The yen has been holding up better against the US dollar than other major currencies recently mainly reflecting the heightened risk of further intervention to support the yen. Media reports at the end of last week stated that US President Trump voiced concern about yen weakness when meeting Japanese policymakers which has reinforced expectations that they remain under pressure to help cap further upside for USD/JPY. The pair has been consolidating between 155.00 and 160.00 since joint US-Japan intervention at the end of July. Over that time period the yen has been one of the best performing G10 currencies alongside the Australian and US dollars," MUFG notes.

"At the same time, the yen is deriving more support from building expectations for faster BoJ rate hikes. The 2-year JGB yield has jumped higher since late last week and moved within touching distance of 2.00% overnight. Market participants now expect the BoJ to deliver 3-4 more hikes in the year ahead. The probability of a back-to-back hike as soon as next month has also been moving up closer a 50:50 call. The release overnight of the latest BoJ minutes from the July meeting also sent a hawkish signal backing up the shift to a faster pace of tightening which is currently underway although they are more dated than normal given developments over the summer," MUFG adds.