USD/JPY now looks to 111.50 near term – UOB

FX Strategists at UOB Group noted the pair’s stance remains on the neutral side, adding that a strong resistance lies at 111.50.

Key Quotes

24-hour view: “We expected a higher USD yesterday but held the view that “the major 111.50 resistance is likely out of reach”. USD subsequently hit a high of 111.35 before staging a surprisingly sharp and rapid drop. USD has likely made a short-term top at 111.35 and the current movement is viewed as part of a correction phase. While the immediate bias is on the downside, any USD weakness is viewed as part of a 110.50/111.20 consolidation range”.

Next 1-3 weeks: “We have held the same view since last Monday (02 Jul, spot at 110.75) wherein “USD is to stay supported but any strength is unlikely to be sustained”. After trading mostly sideways since then, USD perked up in overnight trading and is currently approaching last week’s peak at 111.13. A move above 111.13 seems likely but the next level at 111.50 is a major level and is expected to offer solid resistance. To put it another way, the prospect for a clear break above 111.50 does not appear to be high at this stage. On the downside, only a break of the ‘key support’ at 110.30 (level previously at 110.10) would indicate that the current upward pressure has eased”.