The continuation of the upside bias in USD/JPY could challenge the 139.50 region once 139.00 is cleared, comment FX Strategists at UOB Group Quek Ser Leang and Lee Sue Ann.

Key Quotes

24-hour view: “We indicated yesterday ‘strong upward momentum suggests further advance but a break of 139.00 is unlikely’. Our view turned out to be correct as USD rose to 139.00 before easing off. Upward pressure has eased and this coupled with overbought conditions suggests USD is likely to consolidate for today, likely within a range of 138.15/139.00.”

Next 1-3 weeks: “Yesterday (29 Aug, spot at 138.30), we highlighted that the rapid surge in momentum is likely to lead to an advance to 139.00. USD subsequently rose to 139.00 before easing off to end the day on a firm note at 138.69 (+0.85%). Further USD strength is not ruled even though the 139.00 level is a tough resistance and may be tough to break. Looking ahead, a break of 139.00 would shift the focus to 139.50. On the downside, a breach of 137.40 (‘strong support’ level was at 137.25 yesterday) would indicate that USD is unlikely to advance further.”