USD/JPY now looks to 109.35 – UOB

USD/JPY is likely to test the 109.85 level once 109.35 is cleared, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the sharp and rapid decline appears to be overdone and USD is unlikely to weaken further’ and we expected USD to ‘trade within 108.80/109.30 range’. USD subsequently traded within a broader range than expected (108.62/109.29) before ending the day little changed at 108.88 (+0.05%). Momentum indicators are mostly neutral and USD could continue to trade sideways, likely between 108.75 and 109.35.”

Next 1-3 weeks: “We have held a positive view in USD for more than 3 weeks now. After rising to 109.36, USD has not been able to make much headway on the upside as it traded sideways over the past few days. Upward momentum has waned and barring a sudden surge above 109.35, the odds for USD to move to the next resistance at 109.85 are low. However, only a break of 108.50 (no change in ‘strong support’ level) would indicate that the current positive phase has come to an end.”