USD/JPY: Short-term top in place? – UOB

UOB Group’s FX Strategists noted USD/JPY could have reached a short-term peak.

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.”