USD/JPY fell below 149-levels this morning amid sharp pullback in UST yields. Pair was last at 148.98, OCBC's FX analysts Frances Cheung and Christopher Wong note.

"Trump’s tariffs on Canada, Mexico and China come into effect today, undermining risk sentiments while softer US data reinforces the view that Fed cut cycle can still continue. On JPY side of the equation, BoJ has room to further pursue policy normalisation given wage growth prospects and broadening services inflation. Put together, growing Fed-BoJ policy divergence should continue to drive USD/JPY to the downside."

Bias to sell rallies in USD/JPY

Daily momentum is flat while RSI fell. Bias remains to sell rallies. Support here at 149.20 (50% fibo), 148.80 before 147 (61.8% fibo). Resistance at 150.50, 151.50 (38.2% fibo retracement of Sep low to Jan high).

"That said, we continue to see a confluence of risk factors, including Trump’s tariff threats (reciprocal tariffs) and dividend seasonality trends that may pose intermittent upside pressure for USDJPY. We maintain bias to sell rallies in USD/JPY should there be a bounce driven by tariff uncertainty or seasonality trends."