USD/JPY: The 138.20 region now emerges on the horizon – UOB

In opinion of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, USD/JPY could extend the upside momentum to the 138.20 zone in the near term.

Key Quotes

24-hour view: “We expected USD to trade in a range yesterday. However, it lifted off and soared to 137.19 before extending its advance in early Asian trade. Strong momentum suggests USD is likely to rise further but the major resistance at 138.20 could be out of reach today. On the downside, any pullback is unlikely to threaten 136.50 (minor support is at 137.00).”

Next 1-3 weeks: “Two days ago (06 Mar, spot at 135.90), we indicated that the recent USD strength has ended. We added, USD ‘appears to have moved into a consolidation phase and it is likely to trade within a range of 134.50/137.10 for now’. We did anticipate USD to resume its upward trajectory so quickly as it leapt to a high of 137.19 in NY trade before extending its advance in Asia trade today. The surge in momentum is expected to lead to further USD strength, likely towards 138.20. On the downside, a breach of 136.20 (‘strong support’ level) would indicate that USD is not strengthening further.