Upside momentum in USD/JPY loses traction – UOB

USD/JPY now favours further consolidation as the upside bias seems have run out of some steam, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that the ‘outlook is mixed’ and we expected USD to ‘trade between 110.50 and 111.00’. USD subsequently traded between 110.48 and 110.97. Downward pressure appears to building and USD is likely to edge lower to 110.40. For today a sustained decline below this strong support is unlikely. On the upside, a break of 110.90 (minor resistance is at 110.75) would indicate that the downward pressure has eased.”

Next 1-3 weeks: “We highlighted yesterday that ‘chance for USD to advance to 111.35 has diminished’. We added, ‘in order to rejuvenate the flagging momentum, USD has to move and stay above 111.00 within these 1 to 2 days or a break of 110.40 would not be surprising’. While the ‘strong support’ at 110.40 is still intact, upward momentum has more or less dissipated. In other words, the positive phase in USD that started in the middle of last week has ended sooner than expected. From here, USD could consolidate and trade between 110.05 and 111.10 for a period of time.”