The upward momentum of the USD / JPY faces initial hurdle at 110.25 level in the coming weeks, say UOB Group currency strategists.
Key Comments:
24 hour view: “Last Friday we highlighted that ‘the strong and rapid rally seems exaggerated, but there is scope for USD / JPY to test 110.25 first before reversing.’ Subsequently, USD / JPY rose to 110.19 before falling. Deep overbought conditions suggest that the pair is unlikely to strengthen further. For today, USD / JPY is more likely to consolidate and trade between 109.50 and 110.05. “
Next 1-3 weeks: “There is not much to add to our update last Friday (May 28, USD / JPY at 109.90). As indicated, the strong momentum suggests further USD / JPY strength. Resistance is at 110.25 followed by 110.55. Subsequently, USD / JPY rose to 110.19 before retreating. Short-term overbought conditions could lead to a couple of days of consolidation first. Only a breakout of 109.30 (the ‘strong support’ level was at 109.15 last Friday) would indicate that the bullish risk has dissipated. “
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