USD/JPY still looks to a move above 107.00 – UOB

The upside momentum in USD/JPY is forecasted to push the pair beyond the 107.00 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hoour view: “Our view for USD yesterday was that ‘barring a move below 106.15 (minor support is at 106.30), USD could extend its gain to 106.90 before a pullback can be expected’. Our view was not wrong as USD rose to 107.01 before easing off. Overbought conditions coupled with waning momentum suggest that 107.01 could be an interim top. From here, the pullback from the high has room to edge lower but any weakness is viewed as part of 106.45/107.00 range. In other words, a sustained decline below 106.45 is not expected.”

Next 1-3 weeks: “We highlighted yesterday that ‘upward momentum is showing sign of improving but for now, the prospect for a clear break of 106.60 is not high’. However, the sudden surge in momentum came as a surprise as USD soared to a high of 106.68. The rapid improvement in momentum suggests USD is likely to trade with an upward bias. From here, USD could strengthen towards 107.15. The next resistance at 107.50 is likely out of reach for now. Overall, only a breach of 105.85 (‘strong support’ level) would indicate the current upward pressure has dissipated.”