USD/JPY: Upside momentum now targets 109.95 – UOB

UOB Group’s FX Strategists noted USD/JPY could now head towards the vicinity of the key 110.00 yardstick in the next weeks.

Key Quotes

24-hour view: “We highlighted last Friday that ‘there is chance for USD to test the major resistance at 109.30’. We added, ‘a clear break of this level is unlikely and the next resistance at 109.60 is not expected to come into the picture’. Our view was not wrong as USD rose to 109.36 before closing on a firm note at 109.27 (+0.33%). Upward momentum remains strong and further advance would not be surprising even though overbought conditions could ‘limit’ any gains to a test of 109.60. A move to the next major resistance at 109.95 would come as a surprise. Support is at 109.00 but the stronger level is at 108.75.”

Next 1-3 weeks: “We turned positive on USD last Wednesday (28 Apr, spot at 108.80) where we indicated that USD ‘is expected to trade with an upward bias towards 109.30’. Our view was not wrong as USD rose to 109.36 on Friday. While upward momentum has not improved by much, the upward bias is still intact. The next resistance is at 109.60 followed by a major level at 109.95. On the downside, a breach of 108.55 (‘strong support’ level previously at 108.20) would indicate that the positive phase has ended.”