USD/JPY now focused on 107.80 – UOB

FX Strategists at UOB Group noted USD/JPY now faces a key barrier at the 107.80 region.

Key Quotes

24-hour view: “While our view for USD to strengthen yesterday was correct; our expectation that ‘107.50 is likely out of reach’ was not as USD surged to an overnight high of 107.76 before ending the day higher by +0.95% (the largest 1-day gain since mid-March). The rapid rise is deep in overbought territory and further gain appears unlikely. That said, it is too early to expect a pull-back. For today, USD is more likely to consolidate and trade between 107.10 and 107.80.”

Next 1-3 weeks: “The sudden surge higher in USD that easily took out the strong 107.50 resistance yesterday was unexpected. While upward momentum has picked up considerably, USD has to clear the 107.80 resistance first before further sustained advance can be expected (next resistance is at 108.50) The prospect for a such a scenario is quite high but in order to maintain the current build-up in momentum, USD should not move back below the ‘strong support’ level at 106.60 within these few days.”