USD / JPY targets additional gains on a close above 109.25 – UOB

USD / JPY could advance to the 109.85 level once it breaks above the 109.25 region, suggest currency strategists at UOB Group.

Key Comments:

24 hour view: “Our view for USD / JPY yesterday was that ‘strong bullish momentum suggests USD / JPY could move above last week’s high near 109.25, but overbought conditions could limit any advance to 109.50’ . Our opinion was not wrong as USD / JPY rose to 109.36 before releasing. The underlying tone still looks positive and USD / JPY could rise, but it is unlikely to break the 109.50 level. Support is at 109.00 followed by 108.80 “.

Next 1-3 weeks: “We have been keeping a positive outlook on USD / JPY for over 2 weeks. In our latest narrative from last Wednesday (March 10, USD / JPY at 108.55), we highlighted that ‘the sharp pullback from 109.23 has lessened the odds of further USD / JPY strength’. We add that USD / JPY ‘has to rise soon as a prolonged consolidation at these overbought levels would rapidly increase the risk of a deeper pullback’. USD / JPY rose to 109.36 yesterday before releasing to close slightly higher at 109.12 (+ 0.11%). The bullish momentum has not improved much and USD / JPY has to close above 109.25 before a sustained rally to 109.85 can be expected. Meanwhile, the current positive phase is considered intact as long as USD / JPY does not move below 108.50 (the ‘strong support’ level was previously at 108.20). “

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