In light of the recent price action, USD/JPY could attempt a move to the 142.70 region in the short-term horizon, suggest Markets Strategist Quek Ser Leang and Senior Economist Alvin Liew at UOB Group.

Key Quotes

24-hour view: We expected USD to trade between 141.10 and 142.20 yesterday. However, USD rose briefly to 142.39 and then pulled back. Despite the push to fresh high, there is no significant increase in momentum. Today, there is room for USD to edge higher but any advance is likely part of a higher range of 141.40/142.45. In other words, USD is unlikely to break clearly above 142.45.

 

Next 1-3 weeks: We turned positive in USD one week ago. After USD rose to 142.25 and pulled back, in our update from yesterday (21 Jun, spot at 141.55), we indicated that “the ‘failure’ to break clearly above the major resistance at 142.25 combined with the pullback has decreased the odds for further sustained rise in USD.” We added, “only a breach of 140.40 indicates that USD is not advancing further.” While USD rose above 142.25 in NY trade (high of 142.39), upward momentum has not improved much. That said, as long as 141.00 (‘strong support’ level previously at 140.40) is not breached, USD could grind higher to 142.70.