USD/JPY: Next resistance of note comes at 119.70 – UOB

Further gains in USD/JPY are expected to face the next barrier of note around 119.70, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘a break of 118.65 is unlikely’. However, USD blew past 118.65 and popped to a high of 119.12. Conditions are deeply overbought and USD is unlikely to strengthen much further. For today, USD is more likely to trade sideways at these higher levels, expected to be within a range of 118.45/119.10.”

Next 1-3 weeks: “We have expected a stronger USD since last Thursday (10 Mar, spot at 115.90). As USD soared, in our latest narrative from Tuesday (15 Mar, spot at 118.25), we highlighted that USD strength could continue for a while more. We added, a break of 118.65 would shift the focus to 119.10. Yesterday (16 Mar), USD cracked 118.65 and soared to 119.12. Further USD strength is not ruled out but overbought conditions suggest that the current rally may take a pause first. Looking ahead, the next resistance above 119.10 is at 119.70. On the downside, a breach of 117.90 (‘strong support’ level was at 117.30 yesterday) would indicate that the current strong upward pressure has eased.”