USD/JPY's recent move to the 111.70 region could be viewed as an interim top, suggested FX Strategists at UOB Group.
24-hour view: “We held the view yesterday that USD ‘could retest the overnight high near 111.70 but is likely to ease off from there’. USD subsequently rose to 111.67 before dropping back. Downward momentum has picked up and from here, USD could move lower to 109.90. Resistance is at 111.10 followed by 111.50. The 111.67 high is unlikely to come back into the picture.”
Next 1-3 weeks: “We indicated on Tuesday (24 Mar, spot at 110.60) that ‘upward momentum is showing sign of slowing but USD could still stage another push higher towards 112.20’. Since then, USD has not been able to make much headway on the upside as it closed little changed over the past couple of days. Upward momentum has deteriorated further and the risk of a short-term top has increased. From here, unless USD can post a daily closing above 111.50 within these 1 to 2 days, a break of 109.90 (‘strong support’ level previously at 109.00) would indicate that a short-term top is in place.”
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