Additional US Greenback (USD) power isn’t dominated out in opposition to Japanese Yen (JPY); damaging divergence suggests any advance is unlikely to interrupt above 148.05. Within the longer run, USD view stays constructive; overbought situations recommend a slower tempo of advance, and 148.05 might not come into the image so quickly, UOB Group’s FX analysts Quek Ser Leang and Peter Chia be aware.
USD view stays constructive
24-HOUR VIEW: “USD soared to a excessive of 147.51 final Friday. Yesterday (Monday), we indicated that ‘whereas additional USD power isn’t dominated out, any advance is probably going half of a better vary of 146.75/147.60.’ We identified that USD ‘is unlikely to interrupt clearly above 147.60 or beneath 146.75.’ Nonetheless, after dipping to a low of 146.84, USD rose and broke above 147.60, reaching a excessive of 147.78. Whereas we nonetheless don’t rule out additional USD power, obvious damaging divergence suggests any advance is unlikely to interrupt above the most important resistance at 148.05. Help is at 147.40; a break beneath 147.20 might doubtlessly set off a deeper pullback.”
1-3 WEEKS VIEW: “We turned constructive on USD one week in the past, 08 Jul, when it was at 146.15 (see annotations within the chart beneath). Monitoring the next advance, we identified the next yesterday (14 Jul, spot at 147.70): ‘Whereas we preserve our constructive view, overbought situations recommend a slower tempo of advance, and the subsequent main resistance at 148.05 (close to final month’s excessive) might not come into the image so quickly. Nonetheless, if USD breaks beneath 146.30 (‘robust help’ stage), it could imply that USD isn’t strengthening additional.’ We stand by our view however are elevating the ‘robust help’ stage to 146.70.”
