USD/JPY rebound has further legs – UOB

In view of FX Strategists at UOB Group, the pair’s recovery could extend further although a test of the 112.14 appears unlikely for the time being.

Key Quotes

24-hour view: “USD traded in a surprising quiet manner last Friday before ending the day largely unchanged (NY close of 111.23, -0.05%). The price action is viewed as an ongoing consolidation phase. In other words, we expect USD to trade sideways for today; likely within a 111.00/111.60 range”.

Next 1-3 weeks: “The strong surge in USD yesterday was clearly unexpected. While the pressure has shifted quickly to the upside, the recent choppy price action suggests that it is unlikely USD has moved into a bullish phase. That said, the current rebound has scope to extend higher but at this stage, the month-to-date high of 112.14 is likely out of reach (112.00 is already a formidable resistance). On the downside, a dip below 110.50 (‘key support’) would indicate that the current short-term upward pressure has eased”.