USD/JPY could advance further and is expected to test the mid-108.00s in the near term, noted FX Strategists at UOB Group.
24-hour view: “We highlighted yesterday “108.20 appears to be within reach but prospect for a sustained USD advance above this level is not that high”. We added, “107.50 is likely strong enough to hold any intraday pull-back”. USD subsequently dropped to 107.50 before soaring to 108.18 during late NY hours. The rapid advance over the past few days is showing sign of ‘tiring’ and while USD could advance from here, any up-move is viewed as a higher trading range of 107.80/108.30. The next resistance at 108.50 is unlikely to come into the picture for today”.
Next 1-3 weeks: “The 107.90 level that was highlighted last Friday (06 Sep, spot at 107.00) was exceeded at the time of writing. While our expectation for a rebound to 107.90 was correct, the pace of advance has been more rapid than anticipated. The price action has resulted in a sharp pick-up in momentum and the USD strength could carry it higher to the next pit-stop is at 108.50. On the downside, only a break of 107.20 (strong support previously at 106.30) would indicate that the current upward pressure has eased. Shorter-term, 107.50 is already a strong support level”.
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