USD/JPY turned lower, tracking the dip in UST yields (on dovish Fed rhetoric) while oil prices hold losses (as geopolitical tensions in Middle East subsided for now). USD/JPY was last at 145.62 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Bullish momentum on daily chart
“Comments from BoJ’s Tamura also saw JPY strengthened moderately. In particular, he said that BoJ may need to raise interest rates decisively if upside inflation risks rise, even if it potentially faces uncertainty ahead. He also mentioned that inflation may reach its 2% target sooner than expected. Don’t see 0.5% as barrier for BoJ rate hikes and BoJ must raise rate in timely, appropriate fashion without being too quick or too late.”
“We continue to look for USDJPY to trade lower, premised on Fed likely to cut in due course and BoJ resuming policy normalization while ‘sell USD’ narrative remains alive. Bullish momentum on daily chart shows is fading while RSI fell. Gravestone doji (formed the day before) is typically associated with a bearish reversal and had seen follow-thru in price action overnight.”
“Risks skewed to the downside but key support at 144.20/40 levels (23.6% fibo, 21, 50 DMAs). Decisive break below should see more downside play out. Resistance at 146.60 (100 DMA), 147.15 (38.2% fibo retracement of 2025 high to low).”
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