USD/JPY faces the next hurdle at 112.20 – UOB

The uptrend in USD/JPY now targets the 112.20 level in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is room for USD to test the major resistance at 111.80 before easing’. Our view for a higher USD was not wrong but the subsequent advance exceeded our expectations as USD rose to a high of 112.04. From here, as long as 111.50 is not breached (minor support is at 111.70), USD could test 112.20 first before the risk of a pullback would increase. For today, the next major resistance at 112.50 is not expected to come under threat.”

Next 1-3 weeks: “Yesterday (29 Sep, spot at 111.60), we indicated that ‘the major resistance at 111.80 appears to be within reach’ and that ‘the resistance is at 112.20’. USD subsequently rose above 111.80 (high of 112.04). Further USD strength is not ruled out but deeply overbought conditions indicate that the pace of any advance is likely to be slower. The next resistance above 112.20 is at 112.50. On the downside, a break of 111.10 (‘strong support’ level was at 110.70 yesterday) would indicate that the rally in USD that started last Friday is ready to take a breather.”