Further upside could still push USD/JPY to the 139.00 level and beyond, comment UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We noted last Friday ‘upward momentum appears to be slowing and USD is unlikely to advance much further’ and we expected USD to ‘trade between 137.80 and 138.80’. We did not expect the increase in volatility as USD dropped to 137.96 in London trade, rebounded to 138.65 in NY before plummeting to a low of 137.41. Today, further choppy price actions are not ruled out, likely in a range of 137.25/138.40.”

Next 1-3 weeks: “Our update from last Friday (19 May, spot at 138.40) still stands. As highlighted, while we continue to expect USD to strengthen further, overbought short-term conditions could lead to a couple of days of consolidation before USD resumes its rally (albeit likely at a slower pace). Looking ahead, the next resistance above 139.00 is at 139.60. The USD strength is intact as long as it stays above 136.80 (no change in ‘strong support’ level from last Friday).”