USD/JPY: Upside based on hawkish Fed and widening yield differentials remain largely intact – OCBC

USD/JPY closed in positive territory on Monday and continues to edge higher toward 115.50 on Tuesday, trading in the upper-half of the 114.50-116.00 range. Economists at OCBC Bank expect the pair to remain in the range for now, but risks are still skewed to the upside.

Range-bound

“A diverse mix of drivers will point to diffused overall directionality for now.”

“The 114.50 and 116.00 range still limits the USD/JPY, with the pair now in the top-half of the range.”

“On a more structural basis, the USD/JPY upside arguments based on the hawkish Fed, and widening yield differentials remain largely intact.”