USD/JPY: Rebound underway in the near term – OCBC

USD/JPY continued to trade higher, in line with our caution. Data and BoJ policy may take a back seat for now as the focus shifts to Trump’s reciprocal tariffs on 2 April. Pair was last at 150.41 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

JPY dividend seasonality trends may weigh on JPY

"Bullish momentum on daily chart intact but rise in RSI slowed. We continue to caution for rebound risks in the near term but bias to sell rallies. Death cross appears to be in the making (50 cuts 200 DMA to the downside). Resistance at 151.50 (38.2% fibo retracement of Sep low to Jan high),151.60/70 levels (50, 200 DMAs) and 153.20 (100 DMA). Support at 150, 148.30 and 147 levels (61.8% fibo)."

"Earlier, Trump had ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, singling out Japan and South Korea as nations that he believes are taking advantage of the US. We had also flagged that Japan may be at risk of being hit by reciprocal tariffs as Japanese cars are the top 5 most popular in US. Currently, US imposes a 2.5% tariff on imported Japanese cars and this tariff rate may rise, leading to a potential demand hit for Japanese cars."

"There have been chatters of production adjustments or supply chain shifts in attempt to avert being hit by reciprocal tariff adjustment, but it remains uncertain if this would be useful. In terms of agricultural products, Japan also has a high tariff rate of 204.3% for rice and 23.3% for meat. The risk is a direct tariff hit on Japanese goods that can potentially put a downward pressure on JPY. Additionally, JPY dividend seasonality trends may weigh on JPY in the near term."