USD/JPY now looks to a test of 108.50 – UOB

In view of FX Strategists at UOB Group, USD/JPY could now attempt an assault of the key resistance area around 108.50.

Key Quotes

24-hour view: “We held the view that USD could “test 108.20 first before a deeper pull-back can be expected”. USD subsequently rose to 108.17 before ending the day at 108.07. The underlying tone has improved and this could lead to USD testing the next resistance at 108.30. For today, a break of last month’s 108.47 peak appears unlikely. On the downside, a break of 107.90 would indicate that the current mild upward pressure has eased”.

Next 1-3 weeks: “USD came close to the top of our expected sideway trading range of 107.00/108.20 as it touched 108.17 yesterday. The firm daily closing of 108.06 (+0.12%) has resulted in an improved underlying tone. From here, instead of “trading sideways”, USD could test the major 108.50 level. For now, the prospect for a sustained rise above this level is not high but it would continue to improve as long as USD does not move back below 107.60 within these few days”.