USD/JPY: Sell rally intact – OCBC

USD/JPY turned sharply lower as US payrolls underwhelmed while Finance Minister also commented on FX moves after the pair rose above 150-levels. Pair was last at 147.70, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bias still to sell rallies

"Specifically, he said 'the government is deeply concerned about trends in the currency market, including speculative movements' and that 'it’s important for exchange rates to remain stable, reflecting economic fundamentals'. Earlier on Friday, USD/JPY had traded a high of 150.92 after BoJ Governor Ueda’s press conference lacked hint on timing of next rate hike."

'Right now I don’t see us being behind the curve. Neither do I think there’s a high risk we’ll fall behind... We don’t see the fog suddenly lifting over trade, despite progress made through the US-Japan deal'. Mild bullish momentum on daily chart is fading while RSI fell. Near term consolidation; bias still to sell rallies. Support at 147.10/40 levels (21 DMA, 38.2% fibo), 145.60/80 levels (50, 100 DMAs). Resistance at 149.40/70 levels (200 DMA, 50% fibo retracement of 2025 high to low), 151 levels (recent high)."

"We continue to look for BoJ to hike rate at some point later this year. Political uncertainty (referring to PM Ishiba’s political career/ LDP leadership), credit rating concerns (dependent on fiscal health) and carry allure may still be somewhat supportive of USD/JPY but 'sell USD' trade momentum can negate."