USD/JPY: Looks consolidative ahead of extra gains – UOB

UOB Group’s FX Strategists noted USD/JPY could attempt a rangebound theme ahead of the resumption of the upside to levels above the 106.00 mark in the next weeks.

Key Quotes

24-hour view: “Yesterday, we highlighted that USD ‘could edge lower but any weakness is viewed as part of a 105.50/106.00 range’. We added, ‘a sustained decline below 105.50 is not expected.’ USD subsequently dropped to 105.58 before recovering. Momentum indicators are mostly neutral and USD is likely to trade sideways. Expected range for today, 105.50/105.95.”

Next 1-3 weeks: “There is not much to add to our update from Wednesday (17 Feb, spot at 106.05). As highlighted, upward momentum has improved and USD ‘could extend its gains to 106.35, possibly as high as 106.70’. That said, shorter-term indicators suggest USD could consolidate for a few days first before pushing higher to 106.35. Overall, the positive outlook for USD is deemed intact as long as it does not move below 105.00 (no change in ‘strong support’ level).”