Prospects of further gains in USD/JPY have been losing traction in favour of a consolidative move in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “USD traded between 107.02 and 107.50 yesterday, narrower and higher than our expected range of 106.80/107.45. The underlying tone has improved somewhat and this could lead to USD edging higher even though a break of 107.80 is not expected (minor resistance is at 107.60). On the downside, a break of 107.10 would indicate the current mild upward pressure has eased.”
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.”
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