USD / JPY uptrend could extend to 111.80 region on the short-term horizon, the currency strategists at UOB Group suggest.
24 hour view: “We highlighted yesterday that ‘further strength in USD / JPY is not ruled out, but overbought conditions indicate that a breakout above 111.00 is unlikely.’ While our view for USD / JPY to strengthen was not bad, the USD / JPY broke through the resistance at 111.00 (high at 111.06). Conditions remain deeply overbought, but only a break below 110.65 would indicate that the current upward pressure has eased. Until there is a breakout of 110.65, the USD / JPY could point higher, but any advance is likely limited to a test of the major resistance at 111.20. “
Next 1-3 weeks: “We turned positive on USD / JPY last Friday (September 24, USD / JPY at 110.30) but we do not anticipate the rapid pace of subsequent advance. In our update yesterday (September 27, USD / JPY at 110.70) , we consider that the ‘USD / JPY strength could extend to 111.00 with less likelihood of extension to 111.20’. Subsequently, USD / JPY rose above 111.00 (111.06 high). Conditions are deeply overbought and although USD / JPY could move above 111.20, it remains to be seen if it can extend its gains to the August high near 111.80 (there is a minor resistance at 111.50). Overall, just a breakout of 110.30 (the ‘strong support’ level was at 109.95 yesterday) would indicate that the fast rally of the last few days is ready to take a break. “