USD/JPY: Any advance is unlikely to break above 148.05 - UOB Group

Further US Dollar (USD) strength is not ruled out against Japanese Yen (JPY); negative divergence suggests any advance is unlikely to break above 148.05. 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 soared to a high of 147.51 last Friday. Yesterday (Monday), we indicated that 'while further USD strength is not ruled out, any advance is likely part of a higher range of 146.75/147.60.' We pointed out that USD 'is unlikely to break clearly above 147.60 or below 146.75.' However, after dipping to a low of 146.84, USD rose and broke above 147.60, reaching a high of 147.78. While we still do not rule out further USD strength, apparent negative divergence suggests any advance is unlikely to break above the major resistance at 148.05. Support is at 147.40; a break below 147.20 could potentially trigger a deeper pullback."

1-3 WEEKS VIEW: "We turned positive on USD one week ago, 08 Jul, when it was at 146.15 (see annotations in the chart below). Tracking the subsequent advance, we pointed out the following yesterday (14 Jul, spot at 147.70): '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), it would mean that USD is not strengthening further.' We stand by our view but are raising the 'strong support' level to 146.70."