Olivier Korber, Research Analyst at Societe Generale, suggests that the next risk-off threat is the possibility of the activation of Article 50 by the UK, but now is negotiation time so it is unlikely to happen during the coming weeks.

Key Quotes

“This should provide near-term relief to USD/JPY, which benefits from a compelling technical picture, while the Bank of Japan remains concerned by currency strength.

Bank of Japan could act preventively

In any case, the Bank of Japan is likely to feel compelled to react to the yen's strength if USD/JPY falls much below 100 again. Given that risk, our economists have stated in their post-Brexit outlook that they expect that the central bank will lower its inflation and growth forecasts and that additional easing will include a lower deposit rate and an increase in the amount the monetary base is expanded by on a monthly basis.”