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In opinion of FX Strategists at UOB Group, a test of the 109.70 level in USD/JPY does not look favoured for the time being.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could move above 109.00 but the next resistance at 109.35 is unlikely to come into the picture’. USD subsequently tested the support indicated at 108.60 (low of 108.60) before rising to an overnight high of 109.19. While upward momentum is still positive, it remains lackluster. From here, USD could edge nearer to the 109.35 resistance but a clear break of this level is unlikely. Support is at 108.80 followed by 108.60.”

Next 1-3 weeks: “There is not much to add to our update from Wednesday (03 Jun, spot at 108.75). As highlighted, USD ‘could continue to advance towards 109.35’. While USD has moved higher since then, the advance is lacking in momentum. Looking ahead, a move above 109.35 would not be surprising but in view of the lackluster momentum, the next resistance at 109.70 is unlikely to come into the picture so soon. On the downside, the ‘strong support’ level has moved higher to 108.30 from 107.80.”