USD/JPY seen approaching 109.00 – UOB

FX Strategists at UOB Group suggested USD/JPY needs to regain the 109.00 handle in order to advance further to the 109.60 region.

Key Quotes

24-hour view: “USD had a relatively active day as it reversed an initial dip to 108.41 and rose quickly to an overnight high of 108.89 (we expected USD to trade sideways within a 108.40/108.80 range yesterday). While upward momentum has not improved by much, USD could edge above the strong 109.00 level but for today, a sustained advance above this level is not expected (next resistance is at 109.20). On the downside, yesterday’s low near 108.40 is expected to be strong enough to hold any intraday weakness (minor support is at 108.65)”.

Next 1-3 weeks: “There is not much to add to the update from last Friday (26 Jul, spot at 108.65). As highlighted, while USD is “expected to test the solid 109.00 resistance”, it is unclear for now if USD can maintain a toehold above this level. The lackluster price action over the past couple of days offers no fresh clue and USD has to ‘punch’ above 109.00 and register a NY closing above this level in order to indicate that it is ready to tackle 109.60. Meanwhile, 108.10 is still acting as a strong support and only a break of this level would indicate that the current mild upward pressure has waned”.