USD/JPY interim top in place? – UOB

In opinion of FX Strategists at UOB Group, the pair faces the risks that a potential top could be in place in the near term.

Key Quotes

“USD took out the major 114.35 resistance to hit a high of 114.49. The subsequent sharp and rapid decline from the high was unexpected and has shifted the immediate pressure to the downside. That said, 113.40 is a rather strong support and is unlikely to yield so easily. Resistance is at 114.10 followed by 114.35. The high near 114.50 is unlikely to come into the picture for today”.

“While USD finally broke above the major 114.35 resistance and hit a high of 114.49, the rapid and sharp drop that resulted in an ‘outside bar’ does not bode well for the current bullish view. From here, a move below 113.40 is enough to indicate that an interim top is in place. In other words, a break of 113.40 would indicate that the bullish phase that started about 3 weeks ago has ended and the start of a neutral consolidation phase. Only an unlikely NY closing above 114.50 would indicate that a move towards the next major resistance at 115.50 is on the way”.