In light of the recent price action, USD/JPY could embark on a consolidation range in the next few weeks, suggest Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-hour view: “Yesterday, we expected USD to trade sideways between 139.70 and 140.70. We did not anticipate the surge in volatility as USD traded choppily in a wide range of 139.58/140.93. Downward momentum appears to be building and the bias for USD is tilted to the downside today. In view of the tentative build-up in momentum, any decline is likely to face strong support at 139.30. The next support at 138.80 is unlikely to come under threat for now. Resistance is at 140.20, followed by 140.40.”
Next 1-3 weeks: “We turned positive in USD in the middle of the month. As USD soared, in our latest narrative from Monday (29 May, spot at 140.85), we held the view that USD could break above 141.00 but the solid long-term resistance at 142.00 might not break. We added, ‘only a breach of 139.30 would indicate that the USD strength has run its course’. Yesterday (30 May), USD rose and eked out a fresh 6-month high of 140.93 and then fell sharply to close on a soft note at 139.79 (-0.46%). While our ‘strong support’ level of 139.30 has not been breached yet, the sharp pullback and waning momentum suggest USD is unlikely to break above 141.00 this time around. From here, USD is likely to trade in a range between 137.00 and 141.00.”
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