USD/JPY: Rebound risk in the near term – OCBC

USD/JPY inched higher. Data and BoJ policy may take a back seat for now as the focus shifts to Trump’s reciprocal tariffs on 2 Apr. Pair was last seen trading at 149.65 levels., OCBC's FX analysts Frances Cheung and Christopher Wong note.

Slight rebound risk not ruled out in the near term

"Earlier, Trump had ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, singling out Japan and South Korea as nations that he believes are taking advantage of the US. We had also flagged that Japan may be at risk of being hit by US reciprocal tariffs as Japanese cars are the top 5 most popular in US. (Japan shipped 1.37mio vehicles to US in 2024, accounting for 28% of Japan’s exports to US)."

"Currently, US imposes a 2.5% tariff on imported Japanese cars and this tariff rate may rise, leading to a potential demand hit for Japanese cars. There have been chatters of production adjustments or supply chain shifts in attempt to avert being hit by reciprocal tariff adjustment, but it remains uncertain if this would be useful. In terms of agricultural products, Japan also has a high tariff rate of 204.3% for rice and 23.3% for meat. The risk is a direct tariff hit on Japanese goods that can potentially put a downward pressure on JPY."

"Also not forgetting JPY dividend seasonality trends that may weigh on JPY in the near term. Bullish momentum on daily chart intact while RSI rose. Slight rebound risk not ruled out in the near term but bias to sell rallies. Death cross appears to be in the making (50 cuts 200 DMA to the downside). Resistance at 150, 151.50 (38.2% fibo retracement of Sep low to Jan high) and 152 (50, 200 DMAs). Support at 148.30, 147 levels (61.8% fibo)."