Oct 2 (Reuters) - USD/JPY bulls have had a structural advantage in October, which, if past trends continue, could see the pair climb in coming weeks to break back above 160.

USD/JPY has posted a positive return in October in 18 of the last 26 years, or 69% of the time, including in each of the last five years. However, seasonality should not be considered in isolation, rather it must be corroborated by other factors.

USD/JPY remains underpinned by the continued wide policy rate gap between the Federal Reserve and the Bank of Japan.

This week USD/JPY failed on Monday and Wednesday to sustain a break under the 156.68 Fibo, a 38.2% retracement of the 150.89 to 159.03 (September) EBS rise, which is a bear trap.

A bear trap is set when a market breaks below a technical level but subsequently reverses and is usually a bullish sign.

The 14-day momentum reading is positive, further reinforcing the underlying bullish market structure for a 160 retest.
Seasonality Chart


Daily Chart


Central Bank Expectations Chart

(USD/JPY Martin Miller is a Reuters market analyst. The views expressed are his own)