USD/JPY: Downside risks - OCBC

USD/JPY saw choppy trades over the last 24 hours. USD/JPY was last at 153.61, OCBC's FX analysts Frances Cheung and Christopher Wong note.

USD/JPY may break below the support at 153.30

"Markets were earlier hoping BoJ Governor Ueda dropped some hints or forward guidance on policy move at Dec MPC. But clearly those hopes were misplaced. He said that actual timing of adjustments will continue depending on developments in economic activity and prices as well as financial conditions - This is akin to policy decision being data dependent, which can justify policy action in Dec MPC."

"Governor Ueda also spoke about focus on shunto wage negotiations going forward. Bit and pieces of news flow relating to shunto may come intermittently but typically, we may have to wait till Mar or Apr next year for confirmation of the quantum of wage increase."

"Bullish momentum on daily chart faded while RSI fell. Potential bearish divergence on RSI observed. Further downside play likely. Support at 153.30 (21 DMA, 61.8% fibo retracement of Jul high to Sep low) needs to be broken for bears to gather further traction towards 150.70 (50% fibo). Resistance at 156.50 (76.4% fibo)."