Further bullish momentum could lead USD/JPY to challenge the 137.90 region ahead of a possible move to 138.50 in the coming weeks, according to Lee Sue Ann, UOB Group Economist, and Quek Ser Leang, Market Strategist.
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24 hour view: “USD/JPY extended its rally from last Friday by soaring 0.88% on Monday (NY close at 137.48). While the two days of rapid rise appear to be over, there is room for USD/JPY to continue to advance. In view of the deeply overbought conditions, a sustained rally above the March high near 137.90 is unlikely. Support is at 137.00, followed by 136.60.”
Next 1-3 weeks: “Last Thursday (Apr 26, USD/JPY at 133.60), we held the view that USD/JPY has entered a consolidation phase and is likely to trade in a 132.85/134.70 range at the moment. We had not As sharp a rally as USD/JPY was expected on Friday and lasted through yesterday USD/JPY is likely to continue to strengthen and attention is focused on the March high near 137.90.Breaking of this main resistance would shift attention towards 138.50 Given the overbought conditions in the short term, USD/JPY is likely to continue to advance at a slower pace Overall, only a break of 136.00 would indicate that USD/JPY does not advance further. “
Source: Fx Street
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