The continuation of the upside momentum could lift USD/JPY to the 135.75 level in the short-term horizon according to Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “We expected USD to trade sideways in a range of 133.50/134.50 yesterday. We did not anticipate the choppy price actions as USD soared to a high of 135.12 and quickly pulled back from the high. Upward momentum has improved, albeit not much. Today, USD could test the 135.15 level before the risk of a more sustained pullback increases. The next resistance at 135.75 is unlikely to come under threat. On the downside, a breach of 134.15 (minor support is at 134.35) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “In our most recent narrative from three days ago (17 Apr, spot at 133.80), we highlighted that USD is likely to trade with an upward bias to 134.80. We added, ‘it has to break clearly above this level before further gains can be expected’. Yesterday, USD took out 134.80 and rose to 135.12. Despite the advance, upward momentum has not improved much. However, the bias is still towards a higher USD. The next level to aim for is 135.75. On the downside, the ‘strong support’ level has moved higher to 133.50 from 133.00. A break of the ‘strong support’ level would indicate that USD is not strengthening further.”