In opinion of FX Strategists at UOB Group, USD/JPY needs to clear the 108.50 area in order to attempt a move to 108.85 in the near term.
24-hour view: “The strong 108.50 resistance remains untouched as USD staged a surprisingly rapid retreat from a high of 108.46. The recent strong upward pressure has waned and the current movement is viewed as part of consolidation phase. In other words, USD is expected to trade sideways for today, likely within a 107.80/108.40 range”.
Next 1-3 weeks: “USD touched 108.47 yesterday, just a few pips below the 108.50 level that was first highlighted last Thursday (12 Sep, spot at 107.95) before ending the day on a firm note at 108.44 (+0.29%). We highlighted yesterday (18 Sep, spot at 108.10), “the combination of overbought conditions and waning momentum suggests that USD could be close to making a short-term top” and added, “in order to revive the flagging momentum, it has to move and stay above 108.30 by end of today (18 Sep)”. The firm daily closing suggests a break of 108.50 would not be surprising and the focus would then shift to 108.85. On the downside, a break of 107.50 (no change in ‘strong support’ level) would suggest USD is not ready to tackle 108.85 just yet”.
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