The Japanese Yen (JPY) continues to languish. Economists at Scotiabank analyze USD/JPY outlook.

A rapid move higher in the JPY is possible

We forecast USD/JPY easing to 140.00 in H2. This is predicated primarily on the USD responding negatively to easier Fed monetary policy. 

The onerous carry makes long JPY positions prohibitive unless market participants feel the JPY is poised to rally strongly and in quick order. 

A rapid move higher in the JPY is possible – but perhaps only once traders are convinced that a Fed policy pivot is imminent.