USD/JPY looks firmer and targets 109.30 – UOB

USD/JPY is seen gathering further traction and could visit the 109.30 area in the next weeks, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “We expected USD to strengthen yesterday but we were of the view that ‘108.75 is not expected to come into the picture’. However, USD rose to 108.77 before extending its gains during Asian hours. Momentum remains strong and USD could strengthen further to 109.10. Overbought conditions suggest that the next resistance at 109.30 is likely out of reach. Support is at 108.60 followed by 108.35.”

Next 1-3 weeks: “Yesterday (27 Apr, spot at 108.20), we highlighted that the ‘recent weak phase has run its course’. We added, USD ‘is in a consolidation but is likely to test the top of the expected 107.60/108.75 range first’. While our view was correct, we did not anticipate the rapid surge that took out the 108.75 resistance. Momentum has improved quickly and considerably. Further gains to 109.30 would not be surprising but at this stage, the prospect for extension to 109.70 is not high. Overall, USD is expected to trade with an upward bias as long as it does not move below the ‘strong support’ level at 108.00. On a shorter-term note, 108.35 is already quite a strong level.”