USD/JPY: a test of 109.00 is not ruled out – UOB

Despite the expected sideline trading, USD/JPY could still move to the 109.00 region in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We held the view yesterday that “USD could edge higher but last month’s 108.80 peak is unlikely to yield so easily”. USD subsequently touched 108.80 during NY hours before settling on a firm note at 108.71. While upward momentum appears to be ‘tiring’, there is scope for USD to test 109.00 first before the current advance should ease off. Support is at 108.50 but only a move below 108.35 would indicate that upward pressure has eased”.

Next 1-3 weeks: “USD closed on a firm note yesterday (+0.23%, 108.71). There is no change in our view from yesterday wherein USD is “expected to stay supported” but it has to “move and stay above 108.80” in order to indicate that it is ready to advance in a sustained manner. In other words, if USD were to close above 108.80 in NY, it would suggest that USD is ready to move above 109.00 towards 109.30. On the downside, only a break of the strong support at 108.10 (level was at 107.75 yesterday) would indicate that a short-term top is in place”.