Additional gains in USD / JPY are likely above the 110.60 level, note the currency strategists at UOB Group.
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24 hour view: “Yesterday we highlighted that ‘the overbought movement in USD / JPY has room to extend, but it is unlikely that it can stay above the yearly high near 110.95’. However, instead of breaking 110.95, the US / JPY fell sharply. at 110.15. The upward pressure has dissipated and the current move is seen as part of a consolidation phase. For today, USD / JPY is expected to trade between 110.10 and 110.60. “
Next 1-3 weeks: “Yesterday (June 17, USD / JPY at 110.65), we observed that ‘upside risk remains intact and the level to focus on now is at the annual high near 110.95’. We were not fully expecting the subsequent drop to 110.15 While our “strong support” level at 110.00 remains intact, momentum to the upside has diminished. In order to rejuvenate the dwindling momentum, USD / JPY has to move and stay above 1106.60 within these two days. or the USD / JPY odds of breaking above 110.95 would decrease. Conversely, a breakout of 110.00 would indicate that the pair is not ready to move above 110.95. “
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