USD/JPY: Further strength is not ruled out - UOB Group

Further US Dollar (USD) strength is not ruled out against Japanese Yen (USD); any advance is likely part of a higher range of 146.75/147.60. In the longer run, USD view remains positive; overbought conditions suggest a slower pace of advance, and 148.05 may not come into the picture so soon, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD view remains positive

24-HOUR VIEW: "USD fell to a low of 145.73 last Thursday and then rebounded. On Friday, when USD was at 146.70, we were of the view that it 'may retest the 147.20 level.' However, we pointed out that 'a sustained advance above this level seems unlikely.' The subsequent advance exceeded our expectation, as USD soared to a high of 147.51 before closing up by 0.79% at 147.40. While further USD strength is not ruled out, any advance is likely part of a higher range of 146.75/147.60. In other words, USD is unlikely to break clearly above 147.60 or below 146.75."

1-3 WEEKS VIEW: "We have viewed USD positively since early last week. After USD dropped to 145.73 and rebounded, we indicated last Friday 'the renewed upward momentum has increased the chance of further USD strength.' However, we noted that USD 'must close above 147.20 before a move to 147.60 is likely.' We did not expect USD to then easily break above 147.20, as it soared to a high of 147.51. While we maintain our positive view, overbought conditions suggest a slower pace of advance, and the next major resistance at 148.05 (near last month's high) may not come into the picture so soon. However, if USD breaks below 146.30 ('strong support' level previously at a much lower level of 145.60), it would mean that USD is not strengthening further."