USD/JPY neutral, rebound has further legs – UOB

Spot keeps the neutral stance while there is scope for a continuation of the bull run, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD peeked above 107.00 last Friday before retreating quickly after touching a high of 107.04. The undertone remains positive and we expect USD to extend its gains to 107.30. The next resistance at 107.65 is a major level and is unlikely to come into the picture for now. Support is at 106.50 followed by 106.20”.

Next 1-3 weeks: “We highlighted two days (07 Mar, spot at 105.60) that while the undertone in USD has weakened, “only a NY close below 105.20” would indicate the start of a bearish phase. The major support was unchallenged as USD closed marginally higher at 106.20 in NY yesterday. However, at the time of writing, USD surged and took out the strong resistance levels at 106.45 and 106.70 with ease. The up-move is accompanied by strong momentum and while it is too early to expect the start of a sustained rally, the price action indicates an increasing risk of a stronger recovery. From here, we expect USD to stay underpinned (at least for the next few days) and further strength towards 107.65 would not be surprising. The next resistance is at 107.90 and a break of this level would indicate that last week’s 105.23 low is a more significant bottom than currently expected”.