Mizuho says that the yen gains today are mostly to do with positioning with the US on holiday
That was also pretty much the case on Friday as the market continues to take cues from then in trading today amid the long weekend in the US.
Mizuho says that with earnings releases in focus, alongside the virus situation and key risk events such as the BOJ meeting and US presidential inauguration later this week, the market is keeping a more cautious tone and that is underpinning the yen.
Adding that the move is also aided by some profit-taking in US equities, and isn't likely to accelerate throughout the week as it is mostly a case of positioning.
On the dollar, the firm says that it may respond more favourably to Yellen's testimony to Congress tomorrow - as she is likely to make it clear that the US will protect its key currency status and endorse a basic stance that a strong dollar is in the nation's interest.
Looking at USD/JPY:
Price has consolidated just below 104.00 over the past few sessions after having failed to breach key trendline resistance levels above the figure level, following all the hype surrounding the reflation trade and as Treasury yields climbed.
10-year Treasury yields has since retreated back under 1.10% and that is giving room for some pause in momentum, with the recent risk pullback also helping to limit gains in the pair as the yen strengthens alongside the dollar in recent days.