USD/JPY: Yen underperforming in big comeback in USD - Scotiabank

Analysts at Scotiabank explained that JPY is weak and underperforming the G10, falling to a fresh May low at levels last seen in late April.

Key Quotes:

"The broader tone is dominant, and the release of BoJ minutes from the March meeting hints to concerns about ‘excessive expectations for more easing’. Measures of JPY sentiment suggest uncertainty as CFTC data highlight a paring of risk to both the long and short side over the past two weeks."

"JPY is vulnerable with elevated gross longs just shy of the record levels seen in mid-April. Options prices are turning across a range of time horizons and hint to a broad moderation in the premium for protection against JPY strength. We look to JPY weakness."