The yen game - TDS

"Given the aforementioned risks above, the near-term prospects have shifted lower (again) for USDJPY as the move through 110.80/111.00 should confirm the completion of a head and shoulders formation established in Sep/Oct last year," TD Securities analysts argue.

Key quotes

While USD positioning has been rather skewed on the short side, this has been mostly concentrated against the EUR, so we think there is room for USD shorts to be expressed against the JPY. Further, USDJPY  and US 10yr yields has diverged but insofar as US shutdown risk looms, we suspect that lower yields may have to ’catch-up’.

We have been short USDJPY and target a move 107. We view 110.80/111.00 as key resistance follow by 111.65 as another attractive fade point.