USD/JPY now looks to a test of 115.00 – UOB

The upside momentum in USD/JPY could extend to the 115.00 level in the short-term horizon, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could edge higher but the major resistance at 114.55 is unlikely to come into the picture’. USD subsequently rose to 114.39 before closing at 114.36 (+0.04%). While USD moved above 114.55 during early Asian hours, upward momentum is not that strong and the next major resistance at 115.00 is unlikely to come under threat (there is another resistance at 114.80). That said, only a break of 114.10 (minor support is at 114.30) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “We have maintained a strong USD view for 2 weeks now. In our latest narrative from Monday (18 Oct, spot at 114.20), we indicated that USD ‘is still strong but overbought conditions could lead to consolidation first’. We added, ‘the next resistance is at 114.55 followed by 115.00’. USD moved above 114.55 during early Asian hours and the focus now is at 115.00. That said, deeply overbought conditions suggest that the odds for a sustained advance above 115.00 are not high. The next major resistance at 115.60 is likely out of reach this time round. On the downside, a breach of 113.75 (‘strong support’ level previously at 113.50) would indicate that USD strength has come to an end.”