USD/JPY flows: Pullback but still USD bullish for 2025

Traders says the move of the past couple of days was mainly profit-taking on USD longs and flows in thin conditions and that the underlying tone remains positive towards the USD going into 2025.  The wide 10yr U.S. Treasury-Japan bond spread, plus the reluctance of the BOJ to tighten in December, help the USD mood.  While a test towards 160 will likely be seen on USDJPY, MOF officials will likely threaten FX intervention and some could be seen close to 160.  One extra dimension to watch for is Trump administration view on tactical intervention on USDJPY, which is more possible from the U.S. Treasury than under the Biden administration.