USD/JPY: Further gains awaits above 107.80 – UOB
FX Strategists at UOB Group suggest that USD/JPY needs to clear the 107.80 level to allow for extra gains.
24-hour view: “We held the view yesterday that the “weakened underlying tone suggests USD is likely to trade within a lower range of 106.85/107.55”. USD subsequently traded between 106.72 and 107.27 before ending the day at 107.02 (-0.10%). While the bias is from here is for USD to move lower, lackluster momentum suggests that any weakness is unlikely to move clearly below the 106.60 support (next support is at 106.40). Resistance is at 107.10 but the stronger level is at 107.30.”
Next 1-3 weeks: “After USD surged to 107.76 on Monday, we highlighted on Tuesday (12 Apr, spot at 107.45) that USD “has to clear 107.80 first before further sustained advance can be expected”. We added, “the prospect for such a scenario is quite high but in order to maintain the current build-up in momentum, USD should not move back below the ‘strong support’ level at 106.60 within these few days”. USD drifted lower over the past couple of days and is currently approaching the 106.60 level. While the price action has dented the build-up in momentum, only a breach of 106.60 would indicate the prospect for a break of 107.80 has dissipated. Meanwhile, in order to revive the flagging momentum, USD has to move and stay above 107.30 within these 1 to 2 days.”