USD/JPY now looks to a potential test of 108.50 – UOB

FX Strategists at UOB Group now see USD/JPY advancing to the mid-108.00s in the next weeks.

Key Quotes

24-hour view: “While we expected USD to move higher yesterday, we noted that the upward pressure is mild and did not expect a break of 107.80. However, USD surged past 107.80 and touched 108.08 before retreating. Despite the pull-back, momentum remains firm and from here, barring a move below 107.45, USD could rise towards 108.15 first before a more sustained pullback can be expected. For today, the next resistance at 108.50 is not expected to come into the picture.”

Next 1-3 weeks: “After trading in a quiet manner for about a week, USD was jolted awake as it surged past the major 107.80 resistance (high of 108.08) before closing at 107.68 in NY (+0.33%). While we would prefer a daily closing above 107.80, the rapid pick-up in momentum suggests USD could head higher towards 108.50 in the coming days. At this stage, the prospect for a move to the next resistance at 108.90 is slim. Overall, the outlook for USD is positive as long as the ‘strong support’ at 107.15 is not taken out.”