In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, extra gains in USD/JPY is predicted to face a tough barrier around 136.80 in the short-term horizon.

Key Quotes

24-hour view: “Yesterday, we expected USD to trade sideways in a range of 135.60/136.35. In NY trade, USD dropped to 135.67 and then rebounded quickly to 136.68 before closing at 136.37 (+0.19%). While USD could rise further, there is no clear improvement in upward momentum, and any advance is likely part of a higher range of 135.80/136.80. In other words, USD is unlikely to break clearly above 136.80.”

Next 1-3 weeks: “There is no change in our view from Monday (15 May, spot at 135.80). As highlighted, while the risk in USD has shifted to the upside, it is worth noting that there is a solid resistance near 136.80 ahead of the early May high near 137.80. Overall, only a breach of 135.30 (‘strong support’ level was at 135.00 yesterday) would suggest USD is not ready to head higher towards 136.80.”