UPDATE

he USD/JPY is among the major currency pairs to watch this week, thanks to the yen’s heightened volatility in recent times and the fact we have some key economic data from the US this week. 
• Yen drops as risk sentiment improves
• USD/JPY could resume lower on falling rates expectations
• Core PCE among key data releases to watch
 
USD/JPY bounces back as risk sentiment improves
 
The mood in the markets was noticeably brighter at the start of this week. Investors were hoping that authorities and regulators would be able to ring fence stresses within the banking sector.  The USD/JPY and other yen pairs all bounced back, along with equity indices.
Sentiment towards risk actually improved in the second half of Friday’s session, and that momentum carried into the first half of Monday’s trading.
 
But there has been no fresh news, and so banks will remain under the spotlight. If we see any signs of fresh stress in the sector, then this should fuel a rally in the yen and undermine the USD/JPY pair.