USD/JPY: A test of 137.90 seems to be losing traction – UOB

A probable advance in USD/JPY to the 137.90 region could be running out of steam, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we expected USD to trade sideways between 135.40 and 136.60. However, USD rose briefly above 137.00 (high of 137.09) before retreating quickly. Despite the advance, upward momentum has barely improved. Today, there is scope for USD to edge higher but a break of 137.30 is unlikely. On the downside, a breach of 136.20 would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “We have held a positive USD view for more than 2 weeks now. In our most recent narrative from two days ago (01 Mar, spot at 136.35), we noted that USD ‘must break and hold above 136.90 in the next 1-2 days or the chances of a move to 137.90 will rapidly diminish’. While USD rose to a high of 137.09 in NY trade, it retreated and closed at 136.76. Upward momentum has improved a tad but while the outlook for USD is still positive, the major resistance at 137.90 could be out of reach this time around. On the downside, a break of 135.50 (‘strong support’ level previously at 135.00) would indicate that USD is not strengthening further.”