Goldman Sachs wary of a further rally in USD/JPY beyond 116

Goldman Sachs is not looking for too much higher for the US dollar against the yen.

• "Looking ahead, given the relatively more aggressive policy expectations now priced across the G10, we see a higher bar for the USD/JPY rally to continue much further.
• On our models, if the market were to pull forward the Fed hiking cycle- akin to the recent shift in BoE pricing-it could push USD/JPY up to 116, but further upside would likely require a move higher in the market's view of the terminal rate
• For this reason, investors might consider expressing yen downside views in EUR/JPY instead, where our rates strategists see a case for a steeper 2s5s"

GS commentary comes via eFX:

• For bank trade ideas, check out eFX Plus.