USD/JPY: Unlikely to break above 158.00 – UOB Group
|The US Dollar (USD) could rebound further; overbought conditions suggest any advance is unlikely to break above 158.00. Nonetheless, a breach of 158.50 would suggest that the weakness in USD has stabilized, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
A break above 158.50 to signal USD stabilization
24-HOUR VIEW: “Our view for USD to decline further yesterday was incorrect. Instead of declining, USD rebounded strongly, closing on a firm note at 157.37 (+0.77%). While USD could rebound further today, overbought conditions suggest any advance is unlikely to break above 158.00. Support is at 156.90, followed by 156.30.”
1-3 WEEKS VIEW: “Last Friday (12 Jul, spot at 159.00), we highlighted that 'there is scope for JPY to continue to weaken, but it is too early to determine if the significant support level at 155.50 will come into view.' After USD broke below 155.50, we highlighted yesterday that 'the risk is for further USD weakness, and the level to watch is 154.50, followed by 153.95.' We did not expect the strong rebound and the subsequent firm daily close at 157.37 (+0.77%). From here, a breach of 158.50 (no change in ‘strong resistance’ level) would suggest that the weakness in USD has stabilized.”
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