March 26 (Reuters) - The view in Tokyo is that USD/JPY will continue to trend lower despite speed bumps on the way. Many players are eyeing a test of the 146.55 March 11 low, probably after the turn of Japan's fiscal year at end-March. Shifting Bank of Japan expectations appear to be behind the USD/JPY bias with a number of Tokyo players beginning to expect a policy rate hike in May. The Totan Research/Totan ICAP poll shows the probability of a May hike at 25%, June at 32% and July at 27%. A major Japanese investment bank has also flagged this as a high possibility and is recommending USD/JPY sales on rallies, most recently on the move towards 151.00. USD/JPY hit a 150.95 high in Tokyo Tuesday.

Speculators are trading accordingly despite a build-up of long-yen positions, looking to sell USD/JPY into rallies and occasional blips higher like that seen Tuesday. As of March 18, IMM CTAs were long 122,964 contracts, down from 133,902 contracts the previous week but still massive . Japanese government bond yields have been rising alongside BOJ hike expectations with the two-year yield up to 0.885% and 10-year paper to 1.585% Wednesday, the latter matching the spike high on March 10 and both highest since October 2008.

USD/JPY faces key technical resistance at the descending 200-day moving average at 151.70 currently. A break above this level could derail the downtrend. Major support lies at the March 11 low and around 146.00 with 145.93 the low on October 4, 2024.

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(Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)