The yen is rebounding rapidly after tumbling last month to its weakest level in four decades and there could be more turbulence ahead if the currency echoes its behavior from previous tumultuous episodes.
"The potential for a whipsaw correction similar in magnitude to what we saw in 1998/1999, 2002/2004, 2007/2011 or 2016, is clear,” wrote Kit Juckes, Societe Generale SA’s chief foreign-exchange strategist.
The currency has taken another leg higher in recent days, fueled in part by the potential fallout from China’s deteriorating COVID-19 situation, which is hurting riskier assets. It’s reclaimed, to a certain extent, the mantle of go-to haven that had appeared to fade in recent months as investors focused more intently on interest-rate differentials.