Fundamental forces favor downside in USD/JPY - JP Morgan

Analysts at JP Morgan are bearish on USD/JPY and have put in a stop loss at 107.69 in their short trade on the currency pair. 

Subdued outflow of funds from Japan, USD-bearish environment due to fiscal impasse in Washington and deteriorating US-Japan real yield differential are factors that are likely to drive the currency pair lower, analysts said. 

The anti-risk Japanese yen is also undervalued, analysts noted and added that the dollar remains 6% rich to its long-term average despite its recent depreciation. 

USD/JPY is trading largely unchanged near 105.72 at press time, having put in a low of 104.18 on July 31.