USD/JPY: a test of 109.00 stays on the table – UOB

FX Strategists at UOB Group still expect USD/JPY to re-visit the 109.00 handle in the next weeks.

Key Quotes

24-hour view: “Expectation for USD to edge above 109.00 yesterday did not materialize as it slipped after touching 108.94. Upward momentum has waned and the current movement is viewed as part of a consolidation phase. In other words, USD is expected to trade sideways, likely between 108.35 and 108.85”.

Next 1-3 weeks: “There is not much to add to the update from last Friday (26 Jul, spot at 108.65). As highlighted, while USD is “expected to test the solid 109.00 resistance”, it is unclear for now if USD can maintain a toehold above this level. The lackluster price action over the past couple of days offers no fresh clue and USD has to ‘punch’ above 109.00 and register a NY closing above this level in order to indicate that it is ready to tackle 109.60. Meanwhile, 108.10 is still acting as a strong support and only a break of this level would indicate that the current mild upward pressure has waned”.