In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, USD/JPY could edge higher and revisit the mid-130.00s in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further USD strength is not ruled out but in view of the deeply overbought conditions, the pace of advance is likely to be slower and a clear break of the next major resistance at 130.50 is unlikely’. USD subsequently rose to 130.23, dipped to 129.50 before trading sideways for the rest of the sessions. The price actions appear to be part of a consolidation and USD is likely to trade sideways between 129.40 and 130.20.”

Next 1-3 weeks: “Our update from yesterday (02 Jun, spot at 130.05) still stands. As highlighted, while USD could continue to strengthen, overbought conditions suggest a slower pace of advance. The next resistance is at 130.50 followed by 130.80. Overall, only a break of 129.00 (no change in ‘strong support’ level from yesterday) would indicate that the USD strength that started earlier this week has run its course.”