USD/JPY: Stay short into Kato-Bessent meeting – OCBC

USD/JPY continues to trade with a heavy bias as broad USD softness persists. Pair was last at 140.34 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bias remains skewed to the downside

"Top trade negotiator Akazawa said there was no discussion on FX during trade talks last week but currency discussion between US Treasury secretary Bessent and Finance Minister Kato may still be possible this week when they meet (likely 23/24 Apr). Hence, some downward pressure on USD/JPY is more likely than not."

"Bear in mind that Minister of Finance Kato had previously said that a weak JPY won’t be tolerated when the nation needs to hold trade talks with the US. Bias remains to stay short for USD/JPY into Kato-Bessent meeting later this week. If the talks lead to nothing conclusive about weakening the USD or strengthening the JPY, there may be risk of USD short covering post-meeting."

"Daily momentum is bearish while RSI fell further into oversold conditions. Bias remains skewed to the downside. Support at 140 and 139.60 levels. Resistance at 141.60, 144.10 levels."