USD/JPY: Risks of a short-term top on the rise – UOB

Pablo Piovano FXStreet

According to UOB Group’s FX Strategists, the likeliness of a short-term top in USD/JPY seems to have picked up pace as of late.

Key Quotes

24-hour view: “Yesterday, we expected USD to ‘trade sideways between 109.10 and 109.50’. USD subsequently dipped to 108.99 before closing slightly lower at 109.08 (-0.09%). Downward momentum has improved a tad and the bias for today is tilted to the downside. However, any weakness is likely limited to a test of 108.80. The strong support at 108.55 is unlikely to come under threat. Resistance is at 109.30 followed by 109.45.”

Next 1-3 weeks: “In our narrative from Tuesday (04 May, spot at 109.10), we indicated that ‘there is scope for the current USD strength to extend to 109.95’. We added, ‘the prospect for such a move is not high for now’. Since then, USD has not been able to make any headway on the upside. Shorter-term momentum is beginning to shift to the downside and the risk of a short-term top has increased. However, only a break of 108.55 (no change in ‘strong support’ level) would indicate that the positive phase that started late last week has ended.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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