USD/JPY stays positive while above 108.00 – UOB

The outlook for USD/JPY remains constructive as long as the pair trades above the 108.00 level for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday ‘further sideway trading would not be surprising but the slightly weakened underlying tone suggests a lower range of 108.20/108.80’. USD subsequently traded within a narrower range than expected (108.34/108.81). Momentum indicators are mostly neutral and further sideway-trading would not be surprising. Expected range for today, 108.35/108.95.”

Next 1-3 weeks: “There is not much to add to our latest narrative from Wednesday (10 Mar, spot at 108.55). As highlighted, the sharp pullback from 109.23 (high on Tuesday) has diminished the odds for further USD strength. However, only a break of 108.00 (no change in ‘strong support’ level) would indicate that the positive phase in USD that started about 2 weeks ago has run it is course. That said, USD has to push higher soon as a prolonged consolidation at these overbought levels would quickly increase the risk of a deeper pullback.”