USD/JPY: Upside momentum keeps improving – UOB

The stance on USD/JPY has improved as of late and FX Strategists see the likeliness of extra gains on a breakout of the 107.00 barrier in the next weeks.

Key Quotes

24-hour view: “Our expectation for USD to ‘test the major resistance at 106.70’ did not materialize as it slumped to an overnight low of 105.94. The recent build-up in momentum has more or less dissipated. For today, USD could edge lower by any weakness is viewed as part of a lower trading range of 105.80/106.30. In other words, a sustained decline below 105.80 is not expected.”

Next 1-3 weeks: “We highlighted on Monday (24 Aug, spot at 105.80) that USD ‘is still in a consolidation phase and is expected to trade between 105.00 and 106.70’. Upward momentum is beginning to improve as USD rose to a high of 106.57 yesterday. While a move above 106.70 is not ruled out, further USD strength is likely only if it closes above the major resistance at 107.00. At this stage, the prospect for such a scenario is not high but it would increase as long as USD does not move below 105.60 within these few days.”