BoJ Guidance Key After Fed Move Sends USD/JPY Higher

Japanese yen investors are awaiting guidance from the Bank of Japan (BoJ) after the recent Federal Reserve (Fed) move. According to OCBC strategist Christopher Wong, USD/JPY has climbed following the Fed's decision, as front-end US yields rose and the US Dollar strengthened.

The markets expect a 25bp BoJ hike to 1.25%, with attention focused on Governor Ueda's guidance on further normalisation. Wong notes that while elevated US yields may keep USD/JPY supported, the pair could turn lower if the BoJ signals a firmer pace of tightening or softer US data unwinds some of the Fed repricing.

The USD/JPY was last trading at 156.30 levels, with daily momentum showing tentative signs of turning mildly bullish. Wong also points out that some consolidation is likely after the recent play-out of bullish divergence on MACD, with resistance at 156.70 (38.2% fibo retracement) and support at 155 (23.6% fibo).