USD/JPY: Fading probability of extra gains – UOB

A move beyond 135.75 in USD/JPY appears to be losing momentum, comment Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Last Friday, we held the view that ‘the pullback in USD could extend but a break of the strong support level at 133.50 is unlikely’. Our view was turned out to be correct as USD dropped to 133.54 and then rebounded strongly to closed largely unchanged (134.15, -0.06%). USD appears to have moved into a consolidation phase and it is likely to trade between 133.60 and 134.60.”

Next 1-3 weeks: “We have expected USD to trade with an upward bias since early last week. In our latest narrative from last Thursday (20 Apr, spot at 134.65), we indicated that the bias is still towards a higher USD and the next level to aim for is 135.75. USD has not been able to make further headway on the upside. Upward momentum is beginning to fade and the likelihood of USD advancing to 135.75 is diminishing. However, only a break of 133.50 (no change in ‘strong support’ level) would indicate that USD is likely to trade in a range instead of heading higher to 135.75.”