USD/JPY: BoJ, geopolitics to drive price action – OCBC

USD/JPY rose as Trump and PM Ishiba did not agree to a trade deal, while slightsigns of easing geopolitical tensions also saw some unwinding of JPY longs while market expectation for BoJ to stand pat kept the pair broadly supported. USD/JPY was last at 144.81 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Slight risk to the upside

"We had earlier indicated that BoJ MPC on Tue may complicate JPY’s safe haven story. Governor Ueda’s recent comments that BoJ is still some distance from 2% goal gave the impression that timing of next hike may be pushed back. The timing of the BoJ policy normalisation may be deferred but policy normalisation is not derailed."

"Broadening price pressure and wage growth suggest that BoJ’s next course of action remains a hike but in the interim, BoJ may prefer to stay on hold due to uncertainties on outlook and tariff. Nevertheless, we remain watchful for any surprise hawkish tone (from press conference) as that may pose downward pressure on the pair."

'Mild bullish momentum on daily chart intact while RSI rose. Slight risk to the upside. Resistance at 145.10, 145.50 levels. Support at 144 (21, 50 DMAs), 142.50 levels.'