USD/JPY: Any advance is likely part of a 147.25/148.25 range - UOB Group

There is room for US Dollar (USD) to rise further against Japanese Yen (JPU), but any advance is likely part of a 147.25/148.25 range. In the longer run, upward momentum is starting to build, but USD must first close above 148.25 before a sustained rise can be expected, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum is starting to build

24-HOUR VIEW: "Last Thursday, USD dropped to 145.82 and then rebounded strongly. On Friday, we indicated that USD 'could rebound further, but any advance is likely part of a higher range of 146.50/147.45.' Our view for USD to rebound further was not wrong, but our expectation that any advance is part of a 146.50/147.45 range was incorrect. USD broke above 147.45 and reached a high of 147.94 before closing at 147.66 (+0.45%). Today, there is room for USD to rise further, but this time around, any advance is likely part of a 147.25/148.25 range. In other words, USD is unlikely to break clearly above 148.25."

1-3 WEEKS VIEW: "We indicated last Wednesday (23 Jul, spot at 146.60) that USD 'could weaken to 145.75'. After USD dropped to 145.82 and rebounded, we pointed out last Friday (25 Jul, spot at 147.00) that 'downward momentum is showing early signs of slowing and should USD break above 147.60 ('strong resistance' level), it would mean that 145.82 is the extent of the current weakness.' USD then not only broke above 147.60 but also rose further to a high of 147.94. Downward momentum has faded. Upward momentum is starting to build, but it is not strong enough to indicate a sustained rise just yet. For a continued advance, USD must first close above 148.25. The likelihood of USD closing above 148.25 will remain intact as long as 146.65 ('strong support' level) is not breached. Looking ahead, if USD were to break clearly above 148.25, it could potentially lead to a move toward 149.20."