In opinion of UOB Group’s FX Strategists Lee Sue Ann and Quek Ser Leang, further upside could now see USD/JPY revisit the 131.65 level in the next weeks.
24-hour view: “We expected USD to strengthen last Friday but we were of the view that ‘131.25 is unlikely to come under threat’. USD subsequently rose to 130.80 before extending its advance during early Asian hours. The improved upward momentum suggests that USD could edge above 131.25. The next resistance at 131.60 is not expected to come into the picture. Support is at 130.55 followed by 130.30.”
Next 1-3 weeks: “Last Friday (06 May, spot at 130.40), we highlighted that there is room for USD to retest the 131.25. There is no change in our view for now. That said, momentum has improved further and a clear break of 131.25 would open up the way for USD to advance further to 131.65. Overall, only a breach of 130.00 (‘strong support’ level was at 129.60 last Friday) would indicate that upward momentum has eased.”