USD/JPY needs to break above 142.50 to allow for extra gains – UOB

According to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, USD/JPY faces prospects for further gains above the 142.50 level in the short term.

Key Quotes

24-hour view: “We held the view yesterday that ‘the overbought USD advance could test 142.50 before the risk of a pullback increases’. However, USD did not test 142.50 as it pulled back to a low of 141.13 in late NY trade. The pullback has room to extend to 140.60. The strong support at 140.30 is unlikely to come under threat. Resistance is at 141.50, followed by 141.80.”

Next 1-3 weeks: “After the strong rise in USD on Monday, we highlighted yesterday (22 Nov, spot at 141.80) that upward momentum is building. However, we were of the view that USD has to break and hold above 142.50 before further gains are likely. USD subsequently pulled back to a low of 141.13. There is no change in our view as long as the ‘strong support’ at 140.30 (no change in level) is not breached. Looking ahead, if USD breaks below 140.30, it would suggest a period of consolidation for USD.”