NAB Research discusses USD/JPY outlook and adopts a neutral bias over the coming weeks.
"For now, we expect USD/JPY to continue to trade comfortably inside its key resistance (111), and support (105) levels, pivoting around the 107 mark as it has done since early April. That said, there is a risk geopolitical awakens JPY's safe-haven appeal and not just from US-China tensions. In yet another sign of a growing coalition of nations with shared values, lawmakers in Japan have drafted a resolution calling for the cancellation of a state visit by President Xi Jinping following China's clampdown on Hong Kong," NAB notes.
"The start of US equity reporting season midway through July is also theme to watch, it has the potential to either propel USD/JPY towards 109 or below 106 depending on whether equity markets retain their current poise to skid on downward reassessment of global recovery prospects," NAB adds.