Royal Bank of Scotland - "By most real exchange rate measure, considering the significant persistent competitiveness gains from deflation over the last few decades, it actually appears relatively cheap compared to its long run average.
Our long term bias is to buy dips, but we essentially advised closing longs yesterday on rising political uncertainty in Europe and a view that JPY has taken on a good deal of the role of funding currency and may correct back to 88/90 as we approach the Italian election.
The rally in the last 24 hours has much to do with the early resignation of BoJ Governor Shirakawa. (...) It is negative for the JPY because it creates the impression that the BoJ is continuing to bend and rapidly to the political will of PM Abe. However, it is also the case that Abe was leaving soon anyway and the market was already building in increased activism from the BoJ.
If the Abe government does keep up its activism, the JPY is forecast to move towards 100 over the course of this year. But after its recent surge from below 80 three months ago to nearly 95, we are already three-quarters of the way there.
94.0 is the 38.2% Fibonacci level from the fall from the peak in 2007 to the low in 2011. 95.0 is a significant previous high and resistance level."