USD/JPY: Diminishing bets for extra upside – UOB

UOB Group’s Markets Strategist Quek Ser Leang and Senior Economist Alvin Liew note that extra upside in USD/JPY now loses some momentum.

Key Quotes

24-hour view: Yesterday, we held the view that “there is room for USD to edge above 142.25 before the risk of a pullback increases.” We stated, “support is at 141.55, followed by 141.10.” USD then rose to 142.25 before falling sharply to a low of 141.20. The current price movements are likely part of a consolidation phase and today, we expect USD to trade between 141.10 and 142.20. 

Next 1-3 weeks: Two days ago (19 Jun, spot at 141.85), we noted that “momentum has increased considerably.” However, we highlighted that USD “has to break and stay above 142.25 before further sustained rise is likely.” Yesterday (20 Jun), USD rose to 142.25 and then pulled back sharply. The ‘failure’ to break clearly above the major resistance at 142.25 combined with the pullback has decreased the odds for further sustained rise in USD. However, only a breach of 140.40 (no change in ‘strong support’ level) indicates that USD is not advancing further.