Further upside could motivate USD/JPY to challenge the firm resistance at 136.80 in the near term, according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
24-Hour View: “We did not expect a strong rally in the USD as it touched a high of 135.76 in late NY and then extended its gains in early Asian trade. Not surprisingly, with conditions seriously overbought but still with no signs of weakness, the USD could be higher today. Given overbought conditions, major resistance at 136.80 is likely out of reach today (there is another resistance at 136.30). Support is at 135.50, a break of 135.20 would indicate that USD strength has declined.”
Next 1-3 Weeks: “Our last note was last Thursday (May 11, at 134.20) where ‘while downside momentum is building again, the possibility of a drop to USD 133.00 has not increased much’. We did not expect a strong surge of 0.87% (NY close 135.71) on Friday. A breach of our ‘strong resistance’ at 135.50 indicates that the downside risk has faded. Although the risk has shifted to the upside, it is worth noting that there is a solid resistance near 136.80 from early May highs near 137.80. Overall, only a breach of 134.80 (the ‘strong support’ level) would indicate that the USD is not ready to move towards 136.80.”
