USD/JPY: Diminishing odds for further upside – UOB

Prospects of extra gains in USD/JPY appear to have run out of steam as of late, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we noted that ‘momentum indicators have turned neutral’ and expected USD to ‘trade between 107.35 and 108.00’. USD subsequently traded in a narrow 38 pips range (between 107.46 and 107.84), the smallest 1-day range in more than a month. Momentum indicators remain neutral and further consolidation in USD would not be surprising. Expected range for today, 107.40/108.00.”

Next 1-3 weeks: “After soaring to a high of 108.08 on Tuesday (18 May), USD has not been able to make any headway on the upside. The consolidation over the last couple of days has dented the upward momentum but for now, we are holding on to our view that USD “could head higher towards 108.50”. In order to invigorate the current flagging momentum, USD has to move and stay above 108.00 or a break of the ‘strong support’ at 107.15 (no change in level) would indicate that USD has moved into a consolidation phase. To look at it another way, the prospect for further USD strength has diminished.”