In light of the recent performance, USD/JPY is now targeting 109.75, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “We held the view that ‘there is scope for USD to test 109.30 first before a pull-back can be expected’. However, instead of ‘testing’ 109.30, USD surged through the resistance and hit a 6-month high of 109.60. The rapid rise appears to be running ahead of itself and further USD strength is unlikely for now. USD is more likely to consolidate and trade sideways at these higher levels. Expected range for today, 109.10/109.60″.
Next 1-3 weeks: “While we highlighted on Tuesday (26 Nov, spot at 108.90) that ‘USD is likely to trade sideways even though the uptick in momentum suggests it is likely to probe the top of the expected 108.50/109.50 range first’, the rapid pace of advance in USD that quickly moved above 109.50 was not exactly anticipated (overnight high of 109.60). Upward momentum has improved considerably and the focus is at the major mid to long-term resistance at 109.75. A clear break of 109.75 would greatly increase the prospect for USD to move above 110.00. All in, USD is expected to stay underpinned unless it moves below 108.80 (‘strong support’ level).
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