USD/JPY: Bets for further upside have been trimmed – UOB

The prospect for extra gains in USD/JPY now seems to have lost some momentum, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘deeply overbought conditions suggest that USD is unlikely to strengthen much further’ and we expected USD to ‘consolidate and trade between 115.00 and 115.55’. USD subsequently traded between 115.22 and 115.45 but lurched lower during early Asian hours. The downside risk has increased but 114.60 is expected to offer solid support (next support is at 114.30). Resistance is at 115.20 followed by 115.40.”

Next 1-3 weeks: “We noted yesterday (25 Nov, spot at 115.35) that further USD strength appears likely but overbought conditions could lead to 1 to 2 days of consolidation first. While USD subsequently consolidated between 115.22 and 115.45, it lurched lower during early Asian hours. The sudden and sharp loss in momentum indicates that the odds for further USD strength have diminished considerably. A break of 114.60 (no change in ‘strong support’ level) would indicate that USD strength has come to an end.”