USD/JPY: Resistance at 147.50 is unlikely to come under threat – UOB Group

US Dollar (USD) is expected to strengthen; the significant resistance at 147.50 is unlikely to come under threat. In the longer run, price action suggests further USD upside; too early to tell whether 147.50 is within reach, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Price action suggests further USD upside

24-HOUR VIEW: "Following the sharp rally in USD two days ago, we indicated the following yesterday: 'While strong momentum could lead to further USD strength, deeply overbought conditions suggest any advance is likely limited to a test of 144.80. The major resistance at 145.30 is unlikely to come under threat.' USD rose more than expected, reaching a high of 145.07. Today, shortly after opening, USD surged. We continue to expect USD to strengthen, but this time around, the significant resistance at 147.50 is unlikely to come under threat. There is another resistance at 146.80. On the downside, any pullback is likely to remain above 144.90, with minor support at 145.40."

1-3 WEEKS VIEW: "After expecting a weaker USD for a week, we revised our view to neutral yesterday (28 May, spot at 144.00). We indicated that 'the weeklong USD weakness has stabilised.' We also indicated that 'though there is room for USD to rise further, any advance is likely part of 142.70/145.30 range.' USD subsequently rose to 145.07. Today, USD surged above 145.30. Even though the price action suggests further USD upside, it is too early to tell whether 147.50 is within reach. To sustain the momentum, USD must remain above the ‘strong support’ level, now at 144.50."