USD/JPY: Bias remains to sell rallies – OCBC
USD/JPY traded higher this week after PM Ishiba told parliament that the government is not considering revising a long-standing agreement between BoJ and the government as Japan has not escaped deflation yet. He also added that BoJ’s monetary policy doesn’t aim to move FX. USD/JPY rose to a high of 151.55, and the pair was last seen at 151.61 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
USD/JPY moves may face intermittent upward pressure
“Bearish momentum on daily chart intact but shows signs of fading but rise in RSI slowed. Bias remains to sell rallies. Resistance at 152 levels (200 DMA) and 152.70/80 levels (21 DMA, 23.6% fibo). Support at 150.20 (38.2% fibo), 148.70 levels (100 DMA) and 148.20 (38.2% fibo retracement of September low to November high).”
“In terms of data releases, there is a few to keep a look out for this week, including PPI on Wed and Tankan survey on Fri before BoJ MPC (19 December). But largely, we are looking for BoJ to carry on with policy normalization with a hike next week and into 2025. Recent uptick in base pay supports the view about positive development in labor market, alongside still elevated services inflation, better 3Q GDP and expectations for 5-6% wage increases for 2025.”
“The risk is a slowdown in pace of respective policy normalization, especially if Fed slows pace on return of US exceptionalism. Then USD/JPY moves may even face intermittent upward pressure.”
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FXStreet Insights Team
FXStreet
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