USD/JPY: Dwindling bets for a move to 135.50 – UOB

According to UOB Group’s Economist Lee Sue Ann and Market Strategist Quek Ser Leang, odds for further gains to the 135.50 in USD/JPY seem to be shrinking.

Key Quotes

24-hour view: “We expected USD to edge higher yesterday but we were of the view that ‘any advance is unlikely to break 135.50’. While our view for a higher USD was not wrong, instead of edging higher, it popped to a high of 135.36 in NY trade before pulling back sharply. The pullback is gathering momentum, and the bias is to the downside today. However, it remains to be seen if USD can break the strong support at 134.00. Resistance is at 134.80, followed by 135.20.”

Next 1-3 weeks: “We have held a positive USD view for more than a week now. As USD struggles to reach our objective of 135.50, we highlighted yesterday (23 Feb, spot at 134.95) that the risk for USD is still on the upside and only a break of 134.00 would indicate that USD strength has come to an end. USD subsequently popped to 135.36 before pulling back sharply. Upward momentum is waning rapidly and the likelihood of USD breaking 135.50 has diminished. In other words, the USD strength appears to be coming to an end, but confirmation will come with a break of 134.00.”