Analysts at Nomura explained that the bottom line is that the coming months will be pivotal for markets.
"In recent weeks, we have suggested USD/JPY could face significant downside pressures."
"So far, this has not materialised thanks to higher US yields (and better data) helping the dollar, but because of the possibility of risk aversion, we still think the larger risks are to the downside."
"The clearer trades are likely to be the ones that suffer from Fed/ECB balance sheet adjustments and a rotation in growth surprises away from China to the US."
"These include: buying EUR/NZD, selling AUD/USD, buying USD vs selective Asia FX."
"As for the euro, it should still appreciate even if US data turn higher."
"One reason would be that the first tightening tends to have a much bigger impact on FX, so the dollar has already benefited from its tapering and first hike several years ago, while the euro has yet to."
"Then there is the issue of the euro’s current account surplus and US deficit which may push the euro higher especially in the face of a weak dollar policy. We therefore remain long euro."