Taisuke Tanaka, Strategist at Deutsche Bank, suggests that the recent international securities flow data indicate that the USD/JPY is being supported by dip-buying by pensions and other Japanese investors. Key Quotes “We believe they will continue to seek foreign-bond buying opportunities in the new fiscal year due to insufficient returns under the negative interest rate policy (NIRP). When the economy and markets are calm at home and abroad, the USD/JPY may be underpinned to an extent by overseas investment by Japanese. However, the USD/JPY has recently shown virtually little reaction to favorable factors such as BoJ easing or strong US indicators such as payrolls. Prime Minister Shinzo Abe, facing a Upper House election in July, may decide in late May or early June on an economic stimulus package and whether or not to postpone the consumption tax hike scheduled for April next year. This could provide some support for the USD/JPY from the positive impact on domestic share prices, but the effect is likely to prove very modest. We do not foresee any decisive comeback in the rate until the markets gain more confidence in the sustainability of both the US economic recovery and global risk-on sentiment. The USD/JPY remains vulnerable if US data is weak, a drop in share or oil prices, or Chinese concerns should emerge before that time. Few major indicators are due this week in the US. The market focus is likely to be China's foreign reserves and the dialogue between Fed Chair Janet Yellen and previous Fed chairmen today. In Japan, March international securities flow data on Friday should reveal which investors are actively buying foreign assets.” For more information, read our latest forex news.