USD/JPY scope for a test of 109.30 – UOB

FX Strategists at UOB Group stay neutral on the pair while they see room for a potential visit to the 109.30 region in the short-term horizon.

Key Quotes

24-hour view: “The sudden surge in upward momentum came as a surprise as USD blast past the 108.30 resistance and hit a high of 108.75. The strong rally appears incomplete and a move above the 109.00 resistance would not be surprising. That said, there is another strong resistance at 109.30 and this level is unlikely to yield so easily. On the downside, we expect 108.15 to be strong enough to hold any pullback. Minor support is at 108.45”.

Next 1-3 weeks: “We highlighted yesterday that there is “scope for USD rebound to extend to 108.60” but the manner and pace of which this level was exceeded came as a surprise (high of 108.75). While it is too early to expect a sustained USD rally, the current short-term strength has room to extend further towards 109.30. A break of this level would indicate that USD is ready for a move to 110.00. All in, we continue to hold a positive USD view unless there is a drop back below the ‘key support’ at 107.80 (level adjusted from 107.00)”.