Trading sideways for now – OCBC

USD/JPY turned lower after BoJ Governor submitted a document to government panel, which reiterated that the BoJ would continue to raise interest rates if the economy and prices perform as expected by the BoJ, OCBC FX strategists Frances Cheung and Christopher Wong note.

Sideways trading is likely

“Fed-BoJ policy shifts will bring about a narrowing of UST-JGB yield differentials and this should continue to underpin the broader direction of travel for USDJPY to the downside Elsewhere, the sell-off in equities (pullback in risk appetite) was also another factor weighing on USDJPY.”

“Pair was last seen at 145.20. Bullish momentum on daily chart intact while decline in RSI moderated. Sideways trading likely. Resistance at 146.10 (21 DMA), 147.20 (recent high). Support at 144.40, 143.45 (recent low).”