USD/JPY: Bearish flag playing out – OCBC

FXStreet Insights Team FXStreet

USD/JPY fell on comments from US Treasury Secretary Scott Bessent on Fed and BoJ. Pair was last at 146.55, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Risks skewed to the downside

"He told Bloomberg TV his opinion that BoJ is behind the curve in addressing inflation and that he had discussed inflation in Japan with BoJ Governor Ueda. He added that 'So they’re going to be hiking and they need to get their inflation problem under control'. On Fed, he suggested a 50bp cut in September."

"We have long argued that 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."

"Daily momentum turned mild bearish while RSI fell. Risks skewed to the downside. Immediate support at 146.40 (50 DMA), 145.50 (100 DMA) and 144.10 (61.8% fibo retracement of Apr low to Aug high). Resistance at 147.80 (21 DMA), 148.32 (23.6% fibo)."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD turns negative near 1.1850

EUR/USD has given up its earlier intraday gains on Thursday and is now struggling to hold above the 1.1850 area. The US Dollar is finding renewed support from a pick-up in risk aversion, while fresh market chatter suggesting Russia could be considering a return to the US Dollar system is also lending the Greenback an extra boost.

GBP/USD change course, nears 1.3600

GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.