USD/JPY sticks to the neutral stance, looks to 112.00 – UOB

Spot remains neutral in the near term and it could advance to the 112.00 handle and above in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The recent strength in USD fizzled out sooner than expected as it dropped back during NY hours and hit a low of 111.11. While downward momentum is not strong, USD could continue to grind lower towards 110.85. This is a strong short-term level and is expected to offer solid support. On the upside, only a move back above 111.65 would indicate that the current mild downward pressure has eased (minor resistance is at 111.45)”.

Next 1-3 weeks: “While the rapid pace and extent of the rebound from last week’s 110.37 low was surprising, we are not convinced that USD is ready for a directional move. However, short-term underlying tone has clearly improved and the immediate pressure is on the upside and the probability for a test of last month’s peak near 112.15 has increased. At this stage, we do not anticipate a sustained move above this level. On the downside, only a break of 110.85 would indicate that the current mild upward pressure has eased”.