USD/JPY might not be able to break above 146.55 - UOB Group

Scope for US Dollar (USD) to rise further vs Japanese Yen (JPY); overbought conditions suggest any advance might not be able to break above 146.55. In the longer run, rally has gained momentum, but USD must first break clearly above 146.55 before a further sustained rise is likely, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Rally has gained momentum

24-HOUR VIEW: "When USD was trading at 143.80 in the early Asian trade yesterday, we noted that "the firmer underlying tone indicates the bias for USD is tilted to the upside today, with scope for a test of 144.30." Instead of testing 144.30, USD surged past this level and reached 146.17 in late NY trade. The sharp rally appears to be overextended, but there is scope for USD to rise further. Given the deeply overbought conditions, any advance might not be able to break clearly above the major resistance at 146.55. Support is at 145.30, followed by 144.80."

1-3 WEEKS VIEW: "We highlighted yesterday (07 May, spot at 143.80) that "while we maintain our consolidation view, moderating price swings point to a tighter range of 142.20/145.30 in the near term." We did not expect USD to lift off and soared to 146.17. The sharp rally has gained momentum, but USD must break and hold above 146.55 before a further sustained rise is likely. Looking ahead, above 146.55, there is another strong resistance at 147.10. On the downside, any pullback is likely to hold above the 'strong support' level, currently at 143.90."