A test of 113.00 and above is not ruled out in USD/JPY – UOB

USD/JPY could still attempt to reach the 113.00 handle and above in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday, “USD is expected to grind higher but expect solid resistance at 113.15″. USD popped to a high of 113.13 after FOMC’s announcement before dropping back quickly. While the 113.13 high is deemed as a short-term top, it is too early to expect a sustained pull-back. From here, we expect USD to stay under mild downward pressure and could drift lower towards the 112.40 support. At this stage, a clear break below this level is not expected (next support is at 112.15)”.

Next 1-3 weeks: “USD came very close to the July’s peak near 113.15 as it briefly hit a high of 113.13 during NY hours. The up-move was short-lived as it dropped back sharply to a low of 112.61. We highlighted on Tuesday (25 Sep, spot at 112.80) that “a break above 113.15 would not be surprising”. Despite the relatively weak daily closing (NY close of 112.72, -0.22%), we still see chance for USD to move above 113.15. That said, upward has been dented and the probability for a break of the next resistance at 113.45 is not high. Only a break of 112.15 (no change in ‘key support’) would indicate that a short-term top is in place”.