USD/JPY: Outlook remains constructive near term – UOB

Further gains in USD/JPY seems the most likely scenario for the time being, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we highlighted that USD could break above the major resistance at 139.60. However, we were of the view that ‘the resistance at 140.00 could be out of reach today’. USD rose as expected, held below 140.00 until late NY when it popped to a high of 140.23. Conditions are clearly overbought but there is room for USD to rise to 140.50 before the risk of a pullback increases. 141.00 is highly unlikely to come into view today. Support is at 139.65, followed by 139.35.”

Next 1-3 weeks: “We turned positive in USD two weeks ago on 15 May when USD was trading at 135.80. As USD rose, in our latest narrative form yesterday, we stated, USD is likely to strengthen further and that resistance levels are at 139.60 and 140.00. USD cracked both resistance levels as it soared to a high of 140.23.  While the USD strength appears overdone, both in terms of time and price, the rally is not showing signs of easing just yet. We will continue to hold a positive view even though the next resistance at 141.00 may not come into view so soon. Overall, only a breach of 138.55 (‘strong support’ level was at 138.10 yesterday) would indicate that the current strong upward pressure has eased.”