USD/JPY: Bias to sell rallies – OCBC
USD/JPY rebounded overnight, tracking USD rebound. Pair was last seen at 149.77 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Rebound risks not ruled out in the interim
"US administration’s memorandum to limit Chinese investments, toughen Biden’s chip controls over China and Trump’s comments that the tariffs scheduled to hit Canada and Mexico next month were 'on time' and 'moving along very rapidly' saw the bounce in USD."
"Daily momentum is bearish though while there are signs of it waning while RSI rose. Rebound risks not ruled out in the interim but bias to sell rallies. Support at 149.20 (50% fibo), 148.80 before 147 (61.8% fibo). Resistance at 150.50, 151.50 (38.2% fibo retracement of Sep low to Jan high)."
"Narrowing of UST-JGB yield differentials should continue to underpin the broader direction of travel to the downside. Last Fri, Governor Ueda said that yields reflect economic recovery and rising price trend – consistent with BoJ Takata’s earlier comments. Ueda also reiterated that BoJ will raise rate if economic conditions improve as expected."
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