USD/JPY: USD can rise 145.50 – UOB Group

The US Dollar (USD) could rise 145.50; a sustained advance above this major resistance level is unlikely. In the longer run, upward momentum has dissipated; USD could continue to trade choppily but is likely to stay within a 140.00/146.00 range, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

USD likely to stay within a 140.00/146.00 range

24-HOUR VIEW: “Last Friday, we held the view that USD ‘could rise above the major resistance at 145.50, but a sustained advance above this level seems unlikely.’ We were also of the view that ‘the next resistance at 146.10 is unlikely to come into view.’ The subsequent price movements did not turn out as we anticipated; USD soared to a high of 146.49, then quickly plunged to a low of 142.05. The outsized selloff seems to be overdone, but the weakness in USD could retest the 142.00 level before stabilisation is likely. Today, a sustained decline below 142.00 is unlikely. Resistance 143.70; a breach of 144.50 would mean that the weakness has stabilised.”

1-3 WEEKS VIEW: “We shifted to a positive USD stance on 17 Sep (spot at 143.00), indicating that ‘if USD can break above 144.00, it could trigger a stronger recovery towards 145.50.’ As we tracked the advance, in our update from last Friday (27 Sep, spot at 144.95), we indicated that ‘we continue to expect USD to rise to 145.50, but it has to break and maintain a foothold above this level before a further advance is likely.’ We added, ‘given that momentum has not increased much, the chance of it reaching the next major resistance at 147.00 is not high for now.’ We did not anticipate the subsequent volatility, as USD soared to 146.49 and then, in a dramatic reversal, plunged to 142.05. The breach of our ‘strong support’ level at 143.40 indicates that the buildup in upward momentum has dissipated. From here, USD could continue to trade in a choppy manner, but it is expected to stay within a range of 141.00/146.00 range.”

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