The constructive bias could motivate USD/JPY to challenge the so far YTD peak around 136.70, noted FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “While we expected USD to strengthen yesterday, we were of the view that it ‘is unlikely to break the strong resistance at 136.00’. The anticipated advance exceeded our expectations as USD soared to 136.38. From here, further USD advance is not ruled out but in view of the overbought conditions, a sustained rise above the major resistance at 136.50 is unlikely. Support is at 135.75 followed by 135.45.”
Next 1-3 weeks: “Yesterday (28 Jun, spot at 135.50), we highlighted that downward pressure has more or less dissipated and we expected USD to trade within a range of 134.00/136.50. We did not expect the rapid manner by which USD approaches the top of the expected range at 136.50 (high of 136.38). Shorter-term upward momentum has improved but while a break of 136.50 would not be surprising, the year-to-date high at 136.70 may not be easy to breach. Overall, USD is likely to trade on a firm note from here as long as it does not move below the ‘strong support’ at 135.20 within these few days.”
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