The upside momentum in USD/JPY is expected to face a tough barrier at 109.75, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “While we held the view that “the rapid rise has room to extend higher”, the subsequent rapid and strong surge in USD that easily took out a couple of strong resistance levels came as a surprise. Upward momentum remains robust and from here, USD could move above the early August peak near 109.30. That said, a sustained rise beyond the next resistance at 109.55 is unlikely for today. Support is at 109.00 but only a move below 108.75 would indicate that the current upward pressure has eased”.
Next 1-3 weeks: “While we changed our view for USD to “trade sideways” yesterday (05 Nov, spot at 108.60), the rapid surge that quickly approaches the top of the expected range at 109.30 came as a surprise (overnight high of 109.24). The rapid rise and the subsequent strong daily closing at 109.15 (the +0.54% gain is the largest 1-day advance in 1-1/2 months) suggest that a move above the August peak of 109.30 would not be surprising. However, there is a solid resistance at 109.75 and at this stage, the prospect a rise above this level within the next couple of weeks is not high. All in, USD is expected to trade with a firm footing from here as long as 108.45 (‘strong support’ level) is intact”.
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