USD/JPY: Bias to sell rallies – OCBC

USD/JPY continued to trade modestly softer. Pair was last at 147.09 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bias remains for downside play

"Bearish momentum on daily chart remains intact while RSI fell. Bias remains for downside play. Support here at 146.70/90 (50 DMA 38.2% fibo retracement of Apr low to Aug high), 145.40/50 levels (100 DMA, 50% fibo). Resistance at 147.90 (21 DMA), 148.32 (23.6% fibo) and 149.10. Focus this week on US data, for implication on UST yields and USD."

"Softer NFP print may liven up chatters for a jumbo Fed cut, and that can have implication on USD/JPY. Elsewhere, we continue to keep a look out on the release of the election review report, which should be ready by early-September."

"This report is to inform the LDP on who will take responsibility for the upper house election setback in July. Tokyo CPI last Fri was in line with expectations, reinforcing our bias that BoJ should normalise policy at some point this year. A divergence in Fed-BoJ monetary policy should underpin the broader direction of travel to USD/JPY."