USD/JPY could extend the squeeze higher and reach the 107.00 handle, where strong resistance is expected to emerge, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “As expected, USD continued to be volatile overnight, within a wide 105.69-106.77 range. Determined sellers at 106.80 resisted USD advances for a second day while there are increasing evidence that short-term USD trading ranges are grinding higher. Today, we expect support at a higher level of 105.50 (from 105.10 yesterday) while strong resistances at 106.80-107.00 should continue to cap”.
Next 103 weeks: “Our last narrative was from 13-Aug (spot at 105.35) that “a move below 105.0 would not come as a surprise”. Overnight, USD printed a low of 105.05 before rebounding sharply towards 107.00. The abrupt and sharp move has effectively eased all the downside pressures and upside momentum is gradually building. That said, stiff resistance is still expected at 107.00, having held back buyers for a second time on 13-Aug (last was 6-Aug). The next level above that is 107.50 and only further gains to 108.00 would warrant a ‘positive phase’. On the downside, supports are expected at 105.10 and 104.60″.
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