Further upside could motivate USD/JPY to surpass the 137.85 level in the near term, comment FX Strategists at UOB Group Quek Ser Leang and Peter Chia.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the overbought advance in USD has momentum to extend further but the major resistance at 137.85 is likely out of reach’. Our view was not wrong as USD rose to a high of 137.64. Despite the advance, upward momentum has not improved by much. For today, we expect USD to consolidate and trade within a range of 136.80/137.85.”

Next 1-3 weeks: “We highlighted yesterday (22 Aug, spot at 137.10) that USD is likely to advance but it has to break 137.85 before further USD strength is likely. USD subsequently rose to 137.64 before closing on a firm note at 137.47 (+0.39%). While the price actions suggest USD could break 137.85, upward momentum has not improved by much. To look at it another way, it may take a while before USD could advance to the next resistance at 138.30. Overall, only a break of 136.40 (‘strong support’ level was at 135.90 yesterday) would indicate that USD is unlikely to advance further.”