USD/JPY ticked higher on Tuesday as traders locked in profits on the yen after its sharp rally, which was sparked by comments from Bank of Japan Governor Kazuo Ueda.
• Pullback in JPY appears to lack any meaningful fundamental trigger, suggesting upside should stay limited given ongoing rate-hike signals.
• In a Monday speech in Nagoya, Ueda said officials would assess the “pros and cons” of raising rates in December, offering the strongest hint so far of imminent policy tightening.
• He added that guidance on the future rate path would come once rates hit 0.75%, with wage data and other indicators shaping December’s decision.
• Traders have priced in an increasing probability of a December hike from the Bank of Japan, with last month’s slide in the yen to 10-month lows strengthening the case for tightening.
• Immediate resistance is located at 156.22(Dec 1st high), any close above will push the pair towards 157.36(23.6%fib).
• Support is seen at 155.13 (38.2%fib) and break below could take the pair towards 153.30 (50%fib)
Recommendation: Good to sell around 155.60 with stop loss of 156.50 and target price of 154.50
