USD/JPY fell, in line with our call to sell rallies. Pair was last seen at 151.99, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.

Elections outcome may have implication on USD/JPY

“Bullish momentum on daily chart intact while RSI is in overbought conditions. Bias to sell rallies Support at 150.70/80 levels (50% fibo retracement of Jul high to Sep low, 100 DMA), 148.10/30 levels (21 DMA, 38.2% fibo). Resistance at 153.30 (61.8% fibo retracement of Jul high to Sep low).”

“This morning, Tokyo CPI came in softer at 1.8% y/y (vs. 2.2% prior), somewhat reinforcing BoJ’s rhetoric of not rushing to normalise policy. Our house view does not look for BoJ to hike at upcoming MPC (31 October) though we are still of the view that BoJ is likely to tighten in Dec-2024, amid higher services inflation and wage pressures in Japan. But before that, the key event risk is Japan elections on Sunday (27 October).”