Upside momentum slowing in USD/JPY – UOB
According to FX Strategists at UOB Group, the upside momentum in USD/JPY could be losing some traction, although a move to 112.00 and above still remains on the table.
24-hour view: “Our expectation for USD to ‘drift lower to 109.50’ was incorrect as USD edged to an overnight high of 111.71 before easing off. Despite rising to a fresh high (Monday’s high of 111.59), upward momentum has not improved by much and the risk is still for a pull-back. From here, USD could retest 111.70 but barring a break of 112.20, USD is expected to ease off towards 110.50, possibly 110.00.”
Next 1-3 weeks: “While USD moved above last Friday’s 111.50 high, it retreated quickly after touching 111.59. Upward momentum is showing early sign of tiring but only a break of 108.50 (‘strong support’ level previously at 107.50) would indicate that a temporary top is in place. Until then, another push upwards towards 112.20 is not ruled out just yet.”