Risk-off in equity markets has added to further upward pressure on the JPY, notes Morgan Stanley.
"As the JPY strengthens, the Japanese pension funds and banks start to get worried,as thereis the potential for their foreign investments to start to lose money just on an FX basis.
The impetus for the BoJ or Japanese authorities to prevent the USDJPY from declining is thus strong.
We will be watching the 111.70 level to the downside and then 110.99, the low hit on February 11. A move above the 112.30 area would suggest that the recent downturn has turned around for now," MS argues.
USD/JPY is currently trading at 111.34.
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