It is seen that the USD / JPY is gaining more traction and could visit the 109.30 area in the coming weeks, say UOB Group currency strategists.
Key Comments:
24 hour view: “We expected USD / JPY to strengthen yesterday, but we are of the opinion that ‘108.75 is not expected to enter the picture.’ However, USD / JPY rose to 108.77 before extending its gains during Asian hours. Momentum remains strong. and USD / JPY could further strengthen to 109.10. Overbought conditions suggest next resistance at 109.30 is probably out of reach. Support is at 108.60 followed by 108.35 “.
Next 1-3 weeks: “Yesterday (April 27, USD / JPY at 108.20), we highlighted that the ‘recent weak phase is over’. We add that USD / JPY ‘is in a consolidation, but it will likely first test the upper part of the expected range of 107.60 / 108.75 ‘. While our view was correct, we did not anticipate the rapid rise above the 108.75 resistance. Momentum has improved rapidly and considerably. Further gains to 109.30 would not be surprising, but at this point, the prospect of an extension to 109.70 is not high. In general, the USD / JPY is expected to trade with a bullish bias as long as it does not move below the ‘strong support’ level at 108.00. On a short term note, 108.35 is already quite a level. strong”.
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