USD/JPY: Extra gains remain in the pipeline – UOB

The continuation of the upside momentum could encourage USD/JPY to revisit the 144.00 region, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: After USD soared to a high of 143.91 last Friday and pulled back, we indicated yesterday that “severely overbought conditions combined with tentative signs of slowing momentum suggest USD could pullback further.” We added, “However, any decline is unlikely to break below 142.75.” In London trade, USD fell to a low of 142.93, and then recovered. USD appears to have moved into a consolidation phase and it is likely to trade between 142.80 and 143.80 today. 

Next 1-3 weeks: Our most recent narrative was from last Friday (23 Jun, spot at 143.10) wherein USD is likely to continue to rise and the next level to watch is 144.00. There is no change in our view. However, short-term momentum has waned somewhat, but only a breach of 142.30 (no change in ‘strong support’ level) would indicate the USD strength that started about 1-1/2 weeks ago has come to an end.