Greater upward traction could push the USD / JPY near the 112.00 region on the short-term horizon, note the currency strategists at UOB Group.
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24 hour view: “We expected USD / JPY to strengthen yesterday, but we are of the opinion that ‘a sustained advance above 111.25 is unlikely.’ The sharp rise that sent USD / JPY to 111.63 was a surprise. The upside momentum is strong and is more strength in USD / JPY likely. That said, deeply overbought conditions suggest 111.95 may be out of reach. Soprote is at 111.40 followed by 111.25. “
Next 1-3 weeks: “Although we turned positive in USD / JPY yesterday (July 1, USD / JPY at 111.05), we observed that the upside momentum has not improved at all and we expected USD / JPY to trade on an upside bias towards 111.45. “We did not expect the sudden takeoff that sent USD / JPY to 111.63. Strong positive momentum suggests further USD / JPY strength is likely. However, shorter-term overbought conditions could slow the pace of any rally. Additional. The level to focus on from here is 111.95. A breakout of 111.95 would open the doors for a move to last year’s high near 112.20. The current USD / JPY strength is considered intact as long as it doesn’t move. below 111.00 (the ‘strong support’ level was at 110.55 yesterday).
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