USD/JPY: A move above 110.00 gains momentum. – UOB

The outlook for USD/JPY looks positive with the next targets beyond the 110.00 yardstick in the next weeks, suggested UOB Group’s FX Strategists.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘any advance is not expected to threaten the major resistance at 109.55’. However, USD blew past 109.55 and rocketed to an overnight high of 109.92. The sharp and rapid rally appears to be overdone but there is scope for USD to test 110.25 first before easing (minor resistance is at 110.10). For today, any pullback should hold above 109.40 (minor support is at 109.65).”

Next 1-3 weeks: “Yesterday, we noted that ‘shorter-term upward momentum is beginning to improve’ but we were of the view that ‘it appears too early to expect the start of sustained directional move’. We did not anticipate the sharp rally in USD that sent it rocketing to 109.92. The strong boost in upward momentum indicates that further USD strength is likely. Resistance is at 110.25 followed by 110.55. In order to build on the current momentum, USD should not break the ‘strong support’ at 109.15. On a shorter-term note, 109.40 is already a strong support level.”