USD/JPY: Any advance is likely limited to a test of 144.80 - UOB Group

US Dollar (USD) could strengthen further vs Japanese Yen (JPY); deeply overbought conditions suggest that any advance is likely limited to a test of 144.80. In the longer run, week-long USD weakness has stabilised; USD is likely to trade in a 142.70/145.30 range.

Week-long USD weakness has stabilised

24-HOUR VIEW: "The following are the excerpts from our update yesterday: 'USD could edge lower and retest the 142.20 level. A breach of this level is not ruled out, but any further decline is unlikely to threaten the major support at 141.70. On the upside, resistance levels are at 143.10 and 143.45.' While USD subsequently dipped to 142.10, it surged sharply in a surprise move, reaching a high of 144.45. While strong momentum could lead to further USD strength, deeply overbought conditions suggest any advance is likely limited to a test of 144.80. The major resistance at 145.30 is unlikely to come under threat. Support is at 143.50; a breach of 143.20 would mean that the current upward pressure has eased."

1-3 WEEKS VIEW: "After holding a negative since late last week, we indicated two days ago (26 May, spot at 142.70) that 'the risk is still on the downside, but it remains to be seen if USD can maintain its pace of decline.' We also highlighted that 'the level to monitor is 141.70' and 'a breach of 144.00 ('strong resistance' level) would suggest the weakness has stabilised.' Yesterday, USD dropped to 142.10 and then lifted off, soaring above our 'strong resistance' at 144.00. The price action indicates that the week-long USD weakness has stabilised. Although there is room for USD to rise further, any advance is likely part of 142.70/145.30 range."