FXStreet (Bali) - Long USD/JPY at current levels looks like a good bet to exploit possible USD strength, notes Greg Gibbs, FX Strategist at RBS.

Key Quotes

Firmer US yields this week has helped support USD/JPY. The pair is also bouncing back from weakness on fears over the Ukraine. The JPY has had a chequered history in recent years as a vehicle to fund carry trades, with the USD often preferred.

However, JPY is likely to become the clearer favourite as a funder with its widening external deficit, declining real yields, and aggressive QE policy.

There is some risk that stronger US data and higher US yields supports the USD against other major and emerging currencies. In this respect, long USUSD/JPY and long JPY cross trades appear a safer bet. (