USD/JPY now targets the 111.80 area – UOB

The uptrend in USD/JPY could extend to the 111.80 region in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further USD strength is not ruled but overbought conditions indicate that a break of 111.00 is unlikely’. While our view for USD to strengthen was not wrong, USD took out the 111.00 resistance (high of 111.06). Conditions remain deeply overbought but only a break of 110.65 would indicate that the current upward pressure has eased. Until there is a break of 110.65, USD could edge higher but any advance is likely limited to a test of the major resistance at 111.20.”

Next 1-3 weeks: “We turned positive USD last Friday (24 Sep, spot at 110.30) but we did not anticipate the rapid pace of the subsequent advance. In our update from yesterday (Sep 27, spot at 110.70), we held the view that the ‘USD strength could extend to 111.00 with lower odds for extension 111.20’. USD subsequently rose above 111.00 (high of 111.06). Conditions are deeply overbought and while a USD could move above 111.20, it is left to be seen if it can extend its gains to the August’s high near 111.80 (there is a minor resistance at 111.50). Overall, only a break of 110.30 (‘strong support’ level was at 109.95 yesterday) would indicate that the rapid rally over the past couple of days is ready to take a breather.”