USD/JPY: Run-up looks stretched – OCBC
USD/JPY remains better bid, following LDP’s first loss in more than a decade. USDJPY was last seen at 153.47 levels, OCBC’s FX analyst Frances Cheung and Christopher Wong note.
Near term retracement not ruled out
“The coalition needs to find partners now and this may take a while. A hung parliament means that LDP coalition may face challenges passing policies in parliament. Uncertainty may complicate fiscalmonetary policy, and weigh on JPY in the interim. BoJ meeting (Thu) is likely a non-event as Japanese policymakers are likely to hold off rate increases until there is greater clarity with government formation and economic policies.”
“That said, one should not rule out any surprises. Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim. For USDJPY, the 9% move higher over the last month may have look excessively stretched.”
“Bullish momentum on daily chart intact while RSI shows signs of falling from near overbought conditions. Near term retracement not ruled out. Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 155 and 156.50 (76.4% fibo).”
(This story was corrected on October 29 at 11:00 GMT to say, in the headline, that the research report is from OCBC, not UOB Group.)
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FXStreet Insights Team
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