USD/JPY: Bias for downside play – OCBC

USD/JPY continued to trade lower on comments from MoF officials that they are watching JPY closely and on comments from US Treasury Secretary Scott Bessent. Pair was last at 152.27 levels.

USD/JPY may face a bearish reversal

"He called on Japan’s new government to give BoJ the space to combat inflation. Meanwhile, a softer USD/CNY also weighed on USD/JPY."

Focus still on BoJ meeting outcome tomorrow. Markets are not pricing in any hike until sometime in March next year. Although it is an outside chance, we believe conditions remain intact for policy normalization to take place. Elsewhere, we watch the language and tone for forward guidance."

"Bullish momentum on daily chart faded while RSI fell. Double top formed – typically associated with bearish reversal. We watch price action for confirmation. Support at 151.15 (21 DMA), 150.10 (23.6% fibo retracement of Apr low to Oct high) and 149.20. Resistance at 153.30 (double top). Fed-BoJ policy divergence should help underpin the direction of travel to the downside."