USD/JPY could advance to 108.85 if clears 108.50 – UOB

Further upside in USD/JPY could extend to the 108.85 area on a close beyond 108.50, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD surged during NY hours and came close to the major 108.50 resistance (high of 108.47). Upward momentum has improved but not as much as preferred. However, the overnight price action suggests that a break of 108.50 would not be surprising but the next major resistance at 108.85 is likely out of reach for today. Support is at 108.00 followed by 107.80”.

Next 1-3 weeks: “USD touched 108.47 yesterday, just a few pips below the 108.50 level that was first highlighted last Thursday (12 Sep, spot at 107.95) before ending the day on a firm note at 108.44 (+0.29%). We highlighted yesterday (18 Sep, spot at 108.10), “the combination of overbought conditions and waning momentum suggests that USD could be close to making a short-term top” and added, “in order to revive the flagging momentum, it has to move and stay above 108.30 by end of today (18 Sep)”. The firm daily closing suggests a break of 108.50 would not be surprising and the focus would then shift to 108.85. On the downside, a break of 107.50 (no change in ‘strong support’ level) would suggest USD is not ready to tackle 108.85 just yet”.