USD/JPY: Any advance may be limited to a test of 148.20 – UOB Group

US Dollar (USD) could rebound further; overbought conditions suggest any advance may be limited to a test of 148.20. In the longer run, USD has likely moved back into a range-trading phase between 146.50 and 148.80, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD has likely moved into a range between 146.50 and 148.80

24-HOUR VIEW: "Yesterday, we held the view that USD 'could drop below 146.60,' but we pointed out that 'any further decline is unlikely to reach 145.80.' Our view that USD could decline further was correct, as it dropped to a low of 146.19. However, the sharp rebound from the low was surprising — USD soared to a high of 147.95 in the NY session. Today, USD could rebound further, but given the overbought conditions, any advance may be limited to a test of 148.20. Support is at 147.40, followed by 147.00."

1-3 WEEKS VIEW: "Although we turned negative on USD yesterday (14 Aug, spot at 147.00), we stated that 'it is uncertain for now whether USD has enough momentum to reach the significant support level at 145.80.' We also stated that we 'will maintain our negative view as long as 147.95 (‘strong resistance’ level) is intact.' USD subsequently dropped to a low of 146.19 and then snapped back up to a high of 147.95. Although our ‘strong resistance’ level has not been clearly breached, downward momentum has eased. To put it differently, USD has likely moved back into a range-trading phase, probably between 146.50 and 148.80."