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Prospects of extra gains in USD/JPY appear to be losing momentum, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that “despite the relatively robust rebound, upward momentum has not improved by much” and expected USD to “trade within a higher range of 106.90/107.55”. USD subsequently dipped to 106.84, rebounded quickly to 107.43 before trading mostly sideways for the rest of the sessions. Momentum indicators are mostly ‘neutral’ and for today, USD is likely to consolidate further. Expected range for today, 106.80/107.45.”

Next 1-3 weeks: “After USD surged to 107.76 on Monday, we highlighted on Tuesday (12 Apr, spot at 107.45) that USD “has to clear 107.80 first before further sustained advance can be expected”. We added, “the prospect for such a scenario is quite high but in order to maintain the current build-up in momentum, USD should not move back below the ‘strong support’ level at 106.60 within these few days”. While 106.60 is still intact, the meandering price action over the past several days has dented the upward momentum. In other words, the prospect for USD to move above 107.80 has diminished considerably. From here, USD is more likely to trade between 106.30 and 107.80 for a period.”