USD/JPY could extend the upside above 110.55 – UOB

USD/JPY now faces the likelihood of extra gains beyond the key 110.55 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to ‘strengthen further’ yesterday but we were of the view that ‘overbought conditions suggest that a break of the major resistance at 110.55 is unlikely’. Our view was not wrong as USD rose to 110.44 before easing off quickly. USD is unlikely to strengthen further, for today, USD is more likely to consolidate and trade between 110.00 and 110.40.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (08 Sep, spot 110.25). As highlighted, upward momentum is beginning to improve and the risk of a break of 110.55 has increased. On the downside, if 109.95 is breached within these few days, it would indicate that USD is still ‘caught’ in a 108.30/110.55 range.”