USD/JPY had a choppy session last Friday. Pair was last at 142.64, OCBC FX analysts Frances Cheung and Christopher Wong note.  

Risks skewed to the downside

“Last Friday, USD/JPY traded up to high of 146.49 after candidate Takaichi managed to get into run-off against Ishiba. But it turned out that Ishiba beat Takaichi, who has been vocal against BoJ raising rates. The risk she may win was one of the factors that kept USD/JPY rather supported for most of last week. And as soon as run-off results was known, USD/JPY fell sharply.”

“We still expect the direction of travel for USD/JPY to be down but the BoJ going for a gradual pace of policy normalisation may see pace of USD/JPY decline slow in the short term. To add to uncertainty, PM Ishiba plans to dissolve parliament on 9 Oct and calls for general elections on 27 Oct. Political uncertainty may see Japanese equities fall further, and that may weigh on USD/JPY.” “Bullish momentum on daily chart is fading while RSI fell. Risks skewed to the downside but consolidation likely to hold. Support at 142, 139.60 levels (recent low). Resistance at 143.30 (21 DMA), 144.80 (23.6% fibo retracement of Jul high to Sep low) and 146.20 (50 DMA).”