USD/JPY: Diminishing bets for a test of 137.50 – UOB

Recent downside in USD/JPY poured cold water over the probable move to the mid-137.00s in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Our view that USD ‘could rise above 137.00’ yesterday was incorrect as it dropped to a low of 135.54. Despite the decline, downward momentum has not improved by much and USD is unlikely to weaken further. For today, USD is more likely to trade between 135.55 and 136.45.”

Next 1-3 weeks: “We turned positive USD two days ago (29 Jun, spot at 136.05). After USD soared to a high of 136.99, we indicated yesterday (30 Jun, spot at 136.65) that USD could advance to 137.50. We did anticipate the sharp pullback to a low of 135.54 during NY session. While our ‘strong support’ level is still intact, waning upward momentum suggests that the odds for USD to move to 137.50 have diminished. In order to rejuvenate the flagging momentum, USD has to move and stay above 136.45 within these 1 to 2 days or a break of 135.50 would not be surprising.”