USD/JPY a test of 114.35 loses momentum – UOB

FX Strategists at UOB Group stay bullish on spot although they’ve signaled diminishing odds for a test of 114.35 in the near term.

Key Quotes

“We were of the view that a break of the trend-line resistance at 113.50 would lead to acceleration higher towards the 114.35 high seen in May. While USD broke 113.50 yesterday, it was unable to hold on to its gain and closed unchanged for the day”.

“The lack of a ‘follow-through’ despite the break of a significant resistance coupled with the ‘weak’ daily closing does not bode well for our bullish USD view. The odds for further USD strength towards 114.35 have diminished but only a break below 112.40 would indicate that the bullish phase that started on 20 Jun (spot at 111.65) has ended”.

“In the meanwhile, in order to maintain its bullish impetus, USD has to move and stay above 113.55 within these few days or the odds for further up-move would deteriorate further. We have suggested those who are long USD from 111.65 to exit half of their position at 112.75 previously. Those with remaining long should utilize 112.40 as a stop-loss”.