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USD/JPY: US and JP inflation data tomorrow – OCBC

Shorts in USD/JPY continued to get squeezed, from month-end USD buy flows to US trade court’s ruling on Trump tariffs partially helped to restore some credibility to the system, which has been undermined by the unpredictability of Trump’s tariffs. Pair was last at 145.12 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Near term risks skewed to the upside

"This aided USD’s recent rebound. Daily momentum is not showing a clear bias while RSI rose. Near term risks skewed to the upside but bias to fade. Resistance at 146.50, 147.10 levels. Support at 144.40/70 levels (21 DMA, 23.6% fibo retracement of 2025 high to low), 142.50. US Core PCE data risk (Friday) may see further unwinding, leading to near term USD/JPY upside risks."

"On Friday, we watch Tokyo CPI, IP, retail sales data. Hotter than expected data should curtail the recent rebound. While the timing of BoJ policy normalisation may be deferred, policy normalisation is not derailed. Fed-BoJ policy divergence and USD diversification theme should still support USDJPY's broader direction of movement to the downside."

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FXStreet Insights Team

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.

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