Upside momentum in USD/JPY looks dented – UOB

FX Strategists at UOB Group suggested that USD/JPY could be losing some upside traction in the near term.

• "24-hour view: We held the view yesterday “USD could dip below 107.50 but the next support at 107.20 is not expected to come into the picture”. Aside from yesterday’s early morning low of 107.47, USD did not quite “dip below 107.50” as it rebounded quickly and ended the day little changed at 108.12 (+0.05%). The recovery appears to be running ahead of itself but a test of last Friday’s 108.26 top is not ruled out. The next resistance at 108.50 is unlikely to be challenged. Support is at 107.75 followed by 107.50.
• Next 1-3 weeks: USD eked out a fresh 1-1/2 month high of 108.26 last Friday (13 Sep) before ending the day little changed at 108.07 (-0.01%). However, USD gapped lower upon opening this morning on the back of news of drone attack on Saudi oil facilities. While our 107.20 strong support is still intact, the price action has dented the upward momentum and the prospect for the rebound that started on 06 Sep (spot at 107.00) to extend to 108.50 has diminished. In order to revive the flagging momentum, USD has to move and stay above 108.25 within these few days or a break of 107.20 would not be surprising”.