Further positive momentum might take USD/JPY to the 112.00 area in the immediate term, according to UOB Group FX Strategists.
Observation for 24 hours: “Yesterday, we expected the dollar to strengthen, but we believed that a sustained advance above 111.25 was improbable. The sharp increase in the value of the dollar, which took it to 111.63, was unexpected. The upward trend is solid, and more USD strength is expected. However, given the extreme overbought conditions, 111.95 may be just out of reach. 111.40 is the first level of support, followed by 111.25.”
Within the next 1-3 weeks: “While we turned bullish on the dollar yesterday (01 July, spot at 111.05), we highlighted that upward momentum had not strengthened enough, and we expected USD to ‘trade with an upward bias towards 111.45.’ We weren’t expecting the USD to climb to 111.63 in such a short period of time. The considerable increase in momentum means that the US dollar will continue to strengthen. Short-term overbought situations, on the other hand, might stifle any additional gains. The 111.95 level is the one to watch from here. If 111.95 is broken, a rise to last year’s high near 112.20 is possible. As long as the USD does not go below 111.00 (the’strong support’ level was at 110.55 yesterday), the current strength is considered intact.”/n
