USD/JPY: Eyes on 148.50 – OCBC

USD/JPY jumped in response to geopolitical escalation in the Middle East. USD/JPY was last at 147.82 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Upside risks not ruled out

"Typically, geopolitical concerns should see safe-haven proxies such as JPY rises but geopolitical issues concerning oil may not see the typical relationship play out. Rising oil prices can impact oil import bills and UST yields while timing of BoJ policy normalisation may further be delayed due to higher economic uncertainty."

"As such, this puts temporary upward pressure on USD/JPY. Furthermore, JPY longs are significant by historical standards – can be at risk of further unwinding if weakness persists past key levels. Daily momentum is bullish while RSI rose. Upside risks not ruled out. Next level of resistance is at 148.50. Support at 145.50, 144.20/40 levels (23.6% fibo, 21, 50 DMAs)."