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The upside momentum in USD/JPY could likely extend to the 108.60 level in the next weeks.

Key Quotes

24-hour view: “We expected USD to move higher yesterday but the sudden surge that sent it rocketing to 107.98 came as a surprise (we were of the view that 107.35 is likely out of reach). The swift and sharp rally appears to be running ahead of itself but there is room for USD to test the major resistance near 108.15. For today, a sustained rise above this level is unlikely. On the downside, 107.35 is expected to hold for today (minor support is at 107.55).”

Next 1-3 weeks: “We turned positive USD late last week. As USD ground higher, we noted on Tuesday (02 Mar, spot at 106.80) that the ‘outlook for USD is still positive’ but ‘lackluster shorter-term momentum suggests a slow pace of advance and 107.35 may not come into the picture so soon’. In other words, while we expected a stronger USD, we did not anticipate the sudden overnight surge that sent it rocketing to 107.98 (note that USD posted its largest 1-day gain since Nov last year). Strong boost in momentum is likely to lead to further USD strength to 108.15. The next resistance above this level is at 108.60. Overall, the current positive phase in USD appears to have room to run unless it breaks below 106.95 (‘strong support’ level was at 106.40 yesterday).”