United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann maintain a constructive short-term view on USD/JPY after the pair closed at 157.37. They still see scope for further US Dollar (USD) strength, with intraday moves expected within 157.10–157.90 and firm resistance at 158.40. Strong support is revised up to 156.45, while their longer-term note warns that rapid downside momentum could eventually target the January low at 152.08.

Dollar-Yen holds bullish bias above support

“24-HOUR VIEW: USD rose to 157.52 on Monday. When it was at 157.30 yesterday, we pointed out that “despite the advance, there has been no significant increase in upward momentum.” However, we indicated that “there is a chance for USD to rise further today, even though any advance is likely to stay within a 156.90/157.80 range.” USD subsequently rose to a high of 157.77, declined sharply to 156.80 and then rebounded to close marginally higher by 0.01% at 157.37. There is still a chance for USD to rise today, but with no clear increase in upward momentum, this time round, any advance is likely to stay within a range of 157.10/157.90.”

“1-3 WEEKS VIEW: We have been holding a positive USD view since early last week. Yesterday (22 Sep, spot at 157.30), we indicated that “further USD strength seems likely, but given the overbought conditions, any advance is expected to face firm resistance at 158.40.” We also highlighted that “to keep the momentum going, USD must hold above the ‘strong support’ level at 156.20.” We continue to hold the same view, but we are revising the ‘strong support’ level higher to 156.45.”