USD/JPY: Door open to…134.00? – UOB

The strong upside momentum could lift USD/JPY to the 134.00 neighbourhood in the next weeks, according to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further USD strength would not be surprising and that the next resistance is at 132.60 followed by 133.00’. We added, ‘the latter level is likely out of reach for today’. Our view was not wrong even though USD came close to taking out 133.00 (high has been 132.99). While deeply overbought, there is room for the rally in USD to extend to 133.50. The next resistance at 134.00 is likely out of reach for now. Support is at 132.40 followed by 132.10.”

Next 1-3 weeks: “We have expected USD to strengthen since early last week (see annotations in the chart below). As USD soared, in our latest narrative from yesterday (07 Jun, spot at 132.10), we highlighted that solid upward momentum suggests USD could continue to strengthen towards 133.00. USD subsequently surged to a high of 132.99. Momentum remains strong and USD could rally further to 133.50, possibly 134.00. On the downside, a break of 131.40 (‘strong support’ level was at 130.80 yesterday) would indicate that the USD strength has run its course. On a shorter-term note, 132.10 is already a rather solid support.”