USD/JPY’s price action remains caught in a holding pattern as markets mull various factors including PM Ishiba’s political career, tariff implication and Fed-BoJ policy divergence. Pair was last at 147.73 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

USD/JPY retains bias to sell rallies

"US CPI (tomorrow) may be a trigger for UST yields, depending on the outcome of the reading, and this will have impact on USDJPY. On PM Ishiba’s political career, he will assess his responsibility for LDP’s poor results in the Upper House elections based on an upcoming review by LDP party later this month."

"It was reported that a few LDP members has called for PM Ishiba to step down at the last LDP meeting held on Fri. On tariff development, trade negotiator Akazawa said that US agreed to end the so-called stacking on universal tariffs and reduce tariffs on cars. US will also payback tariffs that were overpaid due to stacking."

"Daily momentum is mild bearish though RSI is flat. Near term consolidation; but retain bias still to sell rallies. Resistance at 147.90 (21 DMA), 149.40/50 levels (200 DMA, 50% fibo retracement of 2025 high to low). Support at 147.10 levels (38.2% fibo), 146.20 (50 DMA). To some extent, political uncertainty (referring to PM Ishiba’s political career/ LDP leadership) and credit rating concerns (dependent on fiscal health) can be supportive of the pair, but 'sell USD' momentum and narrowing UST-JGB yield differentials can also counter."