USD/JPY could test 109.00 on a close above 108.60 – UOB

FX Strategists at UOB Group remain neutral on USD/JPY although a close above 108.60 could allow for extra gains to the 109.00 handle.

Key Quotes

24-hour view: “Our expectation for USD to “trade sideways” was incorrect as it soared to an overnight high 108.28. While upward momentum has not improved by all that much, there is scope for USD to edge above the strong 108.40 resistance. The next resistance at 108.60 is unlikely to come into the picture. On the downside, a break of 108.00 is enough to indicate that the current upward pressure has eased even though the stronger support is at 107.70”.

Next 1-3 weeks: “Despite the relative strong advance in USD, we continue to hold the same view as highlighted earlier yesterday (23 Jul, spot at 107.90) wherein USD is trading sideways within a 107.40/108.40 range. While the underlying tone has improved, only a NY closing above 108.60 would indicate that USD is ready to challenge the early July peak near 109.00. The prospect for such a scenario is not high for now but it would continue to improve as long as 107.70 is intact”.