USD/JPY: Bias to lean against strength – OCBC

FXStreetOct 2, 2025 8:51 AM

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USD/JPY consolidated this morning, after 4 sessions of back-to-back decline. Pair was last at 147.10 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

2-way trades likely

"Daily momentum shows signs of turning mild bearish but decline in RSI moderated. 2-way trades likely, given political risks heading into the weekend, but maintained bias to lean against strength. Resistance at 147.80 (21, 50 DMAs), 148.30 levels (200 DMA, 23.6% fibo retracement of Apr low to Jul high). Support at 146.50/70 levels (100 DMA, 38.2% fibo) and 145.40 (50% fibo)."

"LDP party will vote to select its leader on Saturday. We expect JPY weakness to reverse when political uncertainty fades and that BoJ to proceed with policy normalization. Wage growth, broadening services inflation and upbeat economic activities in Japan should continue to support BoJ policy normalization. The next meeting is on 30 October and another one in December."

"Markets are coming close to pricing in a hike at December meeting. We believe an earlier than expected hike in Oct meeting is plausible. Fed-BoJ policy divergence should underpin USD/JPY's broader direction of movement to the downside. Near term, concerns of duration of US government shutdown provides another tailwind for JPY strength amid proxy demand for safe haven plays."

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