USD/JPY rebounded to trade closer to 154, after trading briefly below 153 overnight. Pair was last seen at 153.54 levels. The rebound overnight tracked UST yields higher, after US data surprised to the upside, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Some factors that may still pose downward pressure on JPY

"Elsewhere in a Bloomberg interview, Japan coalition partner JIP’s co-leader Fujita said 'We are at a stage of focusing more on the real economy… that nominal wages are getting closer to matching inflation levels and businesses are doing better… we’re not at a stage to conduct monetary policy that ends up having a big impact'. He added there is scope to consider incremental hikes at timings that are 'appropriate', but he didn’t specify when he thought the next rate hike should take place."

"Mild bullish momentum on daily chart shows signs of fading while RSI turned lower from near overbought conditions. Risks remain somewhat skewed to the downside. Support at 152.50 (21 DMA), 151.60 (61.8% fibo).

"Delayed BOJ policy normalization, risk of heavier fiscal burden amid rise in debt servicing costs, increase in social and defense spending and chance of early snap elections (given Takaichi’s high approval rating of 74%) are some factors that may still pose downward pressure on JPY. But at the same time, we monitor if JPY moves risk becoming one-sided as that may see jawboning rhetoric play up again."