Further upside to the 138.00/500 area looks increasingly likely in USD/JPY in the next weeks, commented FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘is unlikely to advance much further’ and we expected USD to ‘trade sideways between 136.60 and 137.80’. USD subsequently traded sideways within a range of 136.60/137.80. The price actions appear to be part of a consolidation and USD is likely to trade between 136.50 and 137.50 for today.”

Next 1-3 weeks: “Yesterday (12 Jul, spot at 137.20), we indicated that the risk for USD has shifted to the upside and USD could advance further to 138.00, as high as 138.50. There is no change in our view for now. However, a break of 136.00 (no change in ‘strong support’ level from yesterday) would invalidate our view for a higher USD.”