USD/JPY: Upside bias remains firm – UOB

FX Strategists at UOB Group noted the upward momentum in USD/JPY has improved in last sessions.

Key Quotes

24-hour view: “We highlighted yesterday that ‘overbought conditions suggest that further USD strength is unlikely’. We added, USD ‘is more likely to consolidate and trade between 104.40 and 105.00’. USD subsequently traded between 104.59 and 105.03. While upward momentum has improved a tad, conditions remain overbought and any advance in USD is likely limited to a test 105.15. The major resistance at 105.40 is unlikely to come into the picture. Support is at 104.70 followed by 104.50.”

Next 1-3 weeks: “We highlighted yesterday (01 Feb, spot at 104.70) that the ‘positive outlook in USD is intact’ and ‘a break of 105.00 would shift focus to 105.40’. USD subsequently edged a few pips above 105.00 (high of 105.03) before settling at 104.91 (+0.22%). Upward momentum has improved, albeit not by much. The overall positive outlook is still intact but the 105.40 level may not come into the picture so soon. The positive outlook is deemed intact as long as USD does not move below 104.25 (‘strong support’ level previously at 104.00 yesterday).”