USD/JPY: Scope to extend to 145.60 before stabilisation - UOB Group

Pullback in US Dollar (USD) has scope to extend to 145.60 before stabilisation is likely against Japanese Yen (JPY); strong support at 145.20 is unlikely to come under threat. In the longer run, upward momentum is slowing; if USD breaks below 145.20, it would mean that 147.18 is the extent of the current USD strength, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum is slowing

24-HOUR VIEW: "After USD rose more than we expected two days ago, we indicated yesterday that 'the strong momentum is likely to continue to outweigh the overbought conditions.' However, we also indicated that 'any further USD strength may be limited to 147.20.' Although our assessments were not wrong, as USD rose to a high of 147.18, we did not expect the subsequent sharp pullback from the high. The pullback has scope to extend to 145.60 before stabilisation is likely. The strong support at 145.20 is unlikely to come under threat. Resistance is at 146.60, followed by 146.95."

1-3 WEEKS VIEW: "We turned positive on Tuesday (08 Jul, spot at 146.15), expecting a move to 146.95. After USD quickly surpassed the 146.95, we highlighted yesterday (09 Jul, spot at 146.70) that 'we continue to view USD positively, and the next levels to watch are 147.20 and 147.60.' USD then rose to a high of 147.18 before staging a surprisingly sharp pullback. Upward momentum appears to be slowing, and if USD breaks below 145.20 (no change in 'strong support' level), it would mean that 147.18 is the extent of the current USD strength."