USD/JPY: Bias is to sell rallies – OCBC

USD/JPY continued to trade in recent range after the 2-way moves seen last week owing to US data and comments from Treasury Secretary Scott Bessent. Pair was last at 147.39.

2-way risks likely

"Daily momentum is mild bearish while RSI was flat. 2-way risks likely. Immediate support at 146.50 (50 DMA), 145.50 (100 DMA) and 144.10 (61.8% fibo retracement of April low to August high). Resistance at 147.80 (21 DMA), 148.32 (23.6% fibo). "

"Focus this week on Japan CPI (Friday) but expect external events to drive USD/JPY more. Fed Chair Powell’s speech at Jackson Hole (Friday) will be closely scrutinised as implications on UST yields is likely to drive USD/JPY’s direction."

"Meanwhile, we still favour selling USD/JPY on rallies. A resumption of Fed-BoJ policy divergence should underpin the direction of travel for USD/JPY to the downside. Wage growth, broadening services inflation and upbeat economic activities in Japan should continue to support BoJ policy normalisation."