In opinion of FX Strategists at UOB Group, USD/JPY needs to clear 115.25 to attempt a move to 115.55 in the next weeks.
Key Quotes
24-hour view: “We highlighted yesterday that ‘there is room for USD to test 115.05 first before a pullback can be expected’. We added, ‘the major resistance at 115.25 is not expected to come under threat’. Our view was not wrong as USD rose to 115.15 before pulling back sharply to a low of 114.48. That said, we did not anticipate the subsequent bounce to 115.18. While the rapid advance appears to be running ahead of itself, USD could edge above the major resistance at 115.25. For today, a sustained rise above this level is unlikely (next resistance is at 115.55). Support is at 114.90 followed by 114.70.”
Next 1-3 weeks: “Yesterday (23 Nov, spot at 114.75), we noted that upward momentum is beginning to improve and we were of the view that USD ‘could advance to 115.25’. We highlighted that ‘the prospect for a sustained rise above 115.25 is not high’. USD subsequently roe to 115.18 before closing on a firm note at 115.12. While upward momentum has improved, conditions are overbought and USD has to close above 115.25 before an advance to 115.55 can be expected. On the downside, a break of 114.30 (‘strong support’ level was at 114.05 yesterday) would indicate that the current upward pressure has eased.”
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