USD/JPY: Expected to consolidate in a range of 144.50/148.50 - UOB Group

USD is likely to trade in a sideways range of 145.70/147.50. In the longer run, upward momentum has dissipated; USD is expected to consolidate in a range of 144.50/148.50 for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum has dissipated

24-HOUR VIEW: "When USD was at 147.60 in early Asian trade yesterday, we noted that 'The price movements still appear to be part of a range trading phase.' We expected USD to 'trade between 146.70 and 148.20.' The sudden surge in volatility was surprising, as USD plunged to 145.58. However, the decline was not sustained, as USD staged and swift rebound. Downward momentum has barely increased with the brief decline. Today, instead of continuing to weaken, USD is more likely to trade in a sideways range of 145.70/147.50."

1-3 WEEKS VIEW: "We have viewed USD positively since late last week. In our most recent narrative from two days ago (13 May, spot at 147.90), we expected 'further USD strength.' However, we indicated that 'deeply overbought conditions could lead to a few days of range trading first.' We also indicated that 'We will continue to hold the same view as long as 146.00 ('strong support' level) is not breached.' Yesterday, in a surprising move, USD plummeted to 145.58. Upward momentum has dissipated with the breach of our 'strong support' level. USD has likely entered a consolidation phase, and we expect it to trade in a range of 144.50/148.50 for now."