USD/JPY: Downside pressure loses momentum – UOB

Extra losses look negated in case USD/JPY manages to surpass the 110.55 level, comment FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to ‘trade between 109.85 and 110.30’ yesterday. However, it rose to 110.40 before closing on a firm note at 110.35 (+0.18%). Despite the advance, upward momentum has not improved by much. That said, USD could grind higher from here but a clear break of the strong resistance at 110.55 is unlikely. On the downside, a breach of 110.00 (minor support is at 110.15) would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “We have expected USD to weaken since the middle of last week. After USD dropped to 109.52, we indicated last Friday (09 Jul, spot at 109.85) that USD is still under pressure and a break of 109.50 would open up the way for a move lower to 109.20. Since then, USD has not been able to make much headway on the downside as it edged higher the last couple of days. Downward momentum is beginning to wane and a break of 110.55 (no change in ‘strong resistance’ level) would indicate that USD is not ready to move below 109.50 just yet. In order to rejuvenate the flagging downward momentum, USD has close below 110.00 within these 1 to 2 days or a break of 110.55 would not be surprising.”