According to FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further upside momentum could lift USD/JPY to the 137.50 region in the near term.

Key Quotes

24-hour view: “We highlighted yesterday ‘further USD advance is not ruled out but in view of the overbought conditions, a sustained rise above the major resistance at 136.50 is unlikely’. While USD advanced as expected, it soared to a high of 136.99 before pulling back. Conditions remain overbought and while USD could rise above 137.00, it is unlikely able to maintain a foothold above this level (next resistance is at 137.50). Support is 136.40 followed by 136.15.”

Next 1-3 weeks: “Yesterday (30 Jun, spot at 136.05), we turned positive USD but we were of the view that the year-to-date high at 136.70 may not be easy to break. However, USD cracked 136.70 and popped to a high of 136.99 before easing. The outlook is still positive and USD could advance to 137.50. Overall, only a break of 135.50 (‘strong support’ level was at 135.20 yesterday) would indicate that the current upward pressure has eased.”