USD/JPY neutral but still room for a test of 110.95 – UOB

According to FX Stretegists at UOB Group, the pair’s outlook remains neutral and could extend the upside towards the vicinity of the 111.00 handle.

Key Quotes

24-hour view: “The anticipated USD strength once again exceeded our expectation by easily taking out several strong resistances. The strong daily closing suggests further upward pressure but the next resistance at 110.65 could be out of reach for now (this level is followed by another strong resistance at 110.95). Support is at 109.95 but the stronger level is closer to 109.70”.

Next 1-3 weeks: “We shifted to a neutral stance yesterday but were of the view that the swift recovery in USD has room to extend to 110.10. This level was quickly taken out as USD hit an overnight high of 110.25. The subsequent strong daily closing has shifted the neutral outlook to bullish. While the rally from last Friday’s 107.31 low appears to be running ahead of itself, there is room for further extension to 110.95. Support is at 109.70 but only a move back below 109.20 would indicate that our bullish expectation is wrong. Those looking to buy may like to wait for a dip to 109.75/80 (just above the 109.70 support) to enter long”.