Diminishing odds for a test of 108.50 in USD/JPY – UOB
A potential move to the mid-108.00s in USD/JPY appears to have lost some momentum as of late, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “Yesterday, our view for USD was that it “could test last Friday’s 108.26 top but the next resistance at 108.50 is unlikely to be challenged”. USD subsequently rose to 108.36 but was not able to make much headway. Upward pressure has waned as USD eased off from the high and 108.50 is likely to remain unchallenged for today. That said, it is too soon to expect a significant pull-back. USD is more likely to consolidate and trade sideways at these higher levels, expected to be within a 107.80/108.30 range”.
Next 1-3 weeks: “USD eked out a fresh 1-1/2 month high of 108.36 yesterday (17 Sep) before retreating to end the day unchanged at 108.12. The 108.50 level that was first highlighted last Thursday (12 Sep, spot at 107.95) remains ‘elusive’. As highlighted on Monday (16 Sep, spot at 107.80), upward momentum has been dented and the prospect for the USD rebound that started on 06 Sep (spot at 107.00) to extend to 108.50 has diminished. To look at it another way, the combination of overbought conditions and waning momentum suggests that USD could be close to making a short-term top. In order to revive the flagging momentum, it has to move and stay above 108.30 by end of today (18 Sep). Otherwise, a break of 107.50 (‘strong support’ level previously at 107.20) would indicate that the recovery phase has run its course. Looking ahead, if USD were to register a NY closing above 108.30, the current rebound could extend to 108.85”.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
