USD/JPY: Dollar short squeeze that was most gelt in - OCBC

USD/JPY recent rally can be attributed to comments from new PM Ishiba and Governor Ueda. Pair was last at 146.46, OCBC's FX analysts Frances Cheung and Christopher Wong note.  

Bullish momentum on daily chart intact

"Both sent a coherent message that policymakers are in no hurry to normalise policy. PM Ishiba has also just ordered his cabinet to draw up a comprehensive economic measure. This continues to be aligned with chatters that the PM may be attempting to shore up confidence ahead of snap elections (27 Oct) by drawing up comprehensive economic measures, including a submission of a supplementary budget to parliament after snap elections, talking down prospects of rate hikes and boosting equity markets."

"On monetary policy, PM Ishiba had earlier said that the economy is not ready yet for another interest rate hike while Governor Ueda had earlier said that upside risk to prices does appear to be easing given the recent yen strength... there's some time to confirm certain points when making policy decisions, referring to the importance of checking moves in financial markets and the state of overseas economies."

"He also spoke about range of 140 - 150 for USD/JPY is comfortable. Bullish momentum on daily chart intact but rise in RSI slowed. Immediate resistance at 147.00/20 levels, 148 (38.2% fibo retracement of Jul double-top to Sep low) and 150 levels. Support at 145.20 (50 DMA), 144.80 (23.6% fibo) and 143.35 (21 DMA)."