USD/JPY now focuses on 137.50 – UOB

According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further gains in USD/JPY look under pressure on a breach of 137.50 in the next weeks.

Key Quotes

24-hour view: “Our view for USD to ‘continue to advance to 139.50’ was incorrect as it pulled-back to 138.38 before extending its decline during early Asian hours. Further pullback appears likely even though the strong support at 137.50 is not expected to come under threat (there is another support at 137.80). Resistance is at 138.65 followed by 139.00.”

Next 1-3 weeks: “We turned positive USD last Tuesday (12 Jul, spot at 137.20) and indicated that USD could advance to 138.00, as high as 138.50. After USD surged to a high of 139.39, we highlighted last Friday (15 Jul, spot at 139.00) that boost in upward momentum suggests further USD strength. We indicated that the next levels to focus on are at 139.50 and 140.00. USD subsequently pulled back during NY session and upward pressure has eased a tad. That said, there is no change in our view for now. Overall, only a break of 137.50 (no change in ‘strong support’ level from last Friday) would indicate that USD is not strengthening further.”