USDJPY Smooth fall then crash again

The abnormally sizeable Japanese capital outflows were supporting USDJPY even though US interest rates have plunged close to Japan's levels. The yen now has a favorable balance between a currency that is cheap on most metrics but does not have a cost of carrying disadvantage acting as an anvil on its back. The closer we get to 105, which is widely seen as the low end of the current range, the higher the chance for Japanese hedge ratios to increase on USD assets. This will drive the USDJPY lower, as in this complex chain of events, it will result in a virtuous circle for the yen.