USD/JPY risks still point to further upside – UOB

FX Strategists at UOB Group noted the pair could advance further in the short-term horizon.

Key Quotes

24-hour view: “The expectation for USD to test the strong 112.60 resistance did not materialize as it traded sideways within a relatively narrow range of 112.15/112.44. Indicators have turned ‘neutral’ and further consolidation seems likely for now. Expected range for today; 112.00/112.50”.

Next 1-3 weeks: “We have held a ‘positive’ USD view since last Wednesday (12 Sep, spot at 111.60) where we highlighted “the probability for a test of last month’s 112.15 peak has increased”. While USD struggled to move clearly above 112.15, we indicated on Monday (17 Sep, spot at 112.00) that while “USD strength lacks vigor, further up-move cannot be ruled out”. The sudden surge higher in USD yesterday came as a pleasant surprise as it closed on a solid note (NY close of 112.35, +0.35%). Upward momentum has improved considerably and the immediate risk is still clearly on the upside. From here, a move above 112.60 would not be surprising but there is another strong resistance level at 112.80 and this level may not yield so easily. All in, we continue to expect USD to stay supported in the coming days as long as the ‘key support’ at 111.55 is intact (level previously at 111.35)”.