USD/JPY: Further gains likely above 142.50 – UOB

Further upside appears in store for USD/JPY above 142.50 in the short term, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “The sudden lift-off that sent USD soaring to a high of 142.25 came as a surprise (we were expecting sideways trading). While the sharp and rapid advance is overbought, there is scope for USD to test 142.50 before the risk of a pullback increases. The next resistance at 143.00 is not expected to come under threat. Support is at 141.50, a break of 141.10 would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Last Friday (18 Nov, spot at 140.30), we highlighted that USD appears to have moved into a consolidation phase and is likely to trade within a range of 138.50/142.50. Yesterday (21 Nov), USD soared to a high of 142.25. USD is gaining momentum, but it must break and hold above 142.50 before further gains are likely. The chance of USD breaking above 142.50 would remain intact as long as it does not move below 140.30 within the next few days.”