USD/JPY: Near term rebound; sell rallies preferred – OCBC

USD/JPY rebounded amid chatters of USD short covering, month-end flows. Pair was last at 144.03 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Near term risks for the USD/JPY are to the upside

"Mild bearish momentum on daily chart is fading while RSI rose. Near term risks skewed to the upside. Resistance at 145.40 (50 DMA), 146.10 levels. Support at 142.20 levels."

"USD risks (FOMC minutes, Core PCE) this week may see further unwinding, leading to near term USD/JPY upside risks. We look for rally to fade into again. On Friday, we watch Tokyo CPI, IP, retail sales data. Hotter than expected data should curtail the recent rebound. While the timing of BoJ policy normalisation may be deferred, policy normalisation is not derailed."

"Fed-BoJ policy divergence and USD diversification theme should still support USDJPY's broader direction of movement to the downside."