Guillermo Felices, Global Investment Strategist at PGIM Fixed Income, said the selloff in French government bonds could prompt Japanese investors to repatriate their capital, potentially marking a turning point for the yen.

Felices noted that Japanese investors have historically been major buyers of French bonds, so the current turmoil in France may lead Japanese investors to more carefully consider whether it is now worthwhile to invest in Japanese assets given rising yields.

If investors ultimately conclude that Japan's fiscal policy is more sustainable than that of France or other countries, that would also be a positive factor for Japanese assets.

Hedging costs, especially those denominated in US dollars, remain high for Japanese investors, which makes them more inclined to keep their capital at home.