USD/JPY faces further consolidation – UOB

In view of FX Strategists at UOB Group, spot is likely to extend the consolidative theme in the near term.

Key Quotes

24-hour view: “We expected USD to “test 111.25” yesterday but were of the view that “the next resistance at 111.50 is not expected to come into the picture”. USD soared to a high of 111.44 during NY hours before ending the day on a strong note at 111.34 (+0.45%). While the rapid rise appears to be running ahead of itself, strong momentum suggests USD could advance further to 111.70 (next resistance is at 111.95). On the downside, support is at 111.05 followed by yesterday’s low near 110.80. The latter level is expected to be strong enough to hold any intraday pullback”.

Next 1-3 weeks: “USD soared and hit an overnight high of 111.44, just below the top of our expected 110.00/111.50 sideway-trading range. The rapid rise has increased the odds for further USD strength even though we have doubts about the sustainability of any advance. For now, we continue to hold the view that USD is ‘trading sideways’ but if USD were to close above 111.70, it would be a good indication that USD is ready to challenge last month’s 112.12 peak. The prospect for a higher USD is not that high but it would increase quickly as long as it doesn’t move back below 110.80 within these couple of days”.