USD/JPY: Rally could extend above 155.00 before pausing – UOB Group

Overbought US Dollar (USD) rally could extend above 155.00 before pausing; the next resistance at 156.00 is unlikely to be tested. In the longer run, spike in momentum suggests USD could continue to rise, possibly to 156.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD can continue to rise, possibly to 156.00

24-HOUR VIEW: “We noted yesterday that ‘the outlook is unclear’, and we expected USD to ‘trade in a broad range of 151.20/153.35.’ We did not anticipate the ensuing rally that sent it skyrocketing to 154.70. While severely overbought, the rally in USD could extend above 155.00 before pausing. The next resistance at 156.00 is unlikely to be tested. To keep the momentum going, USD must remain above 153.50, with minor support at 154.00.”

1-3 WEEKS VIEW: “Our most recent update was from last Friday (01 Nov, spot at 152.05), wherein ‘The USD advance from early last month has ended.’ We indicated that ‘downward momentum is beginning to build, but USD has to break and remain below 151.05 before a more sustained decline can be expected.’ After edging to a low of 151.27 early yesterday, USD jumped and broke above our ‘strong resistance’ level of 153.35. It surged further to 154.70. Given the spike in momentum, USD could continue to rise, possibly to 156.00. On the downside, should USD break below 152.50 (‘strong support’ level), it would mean that the current upward pressure has eased.”