Chance for overbought US Dollar (USD) advance to test 151.20 vs Japanese Yen (JPY); a sustained rise above this level is unlikely. In the longer run, downward momentum has faded; current price movements are likely part of a rebound that could potentially reach 151.90, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Downward momentum has faded
24-HOUR VIEW: "We did not expect USD to rise sharply to 150.98 last Friday; we were expecting range trading. Although overbought, strong momentum suggests there is a chance for USD to test 151.20. A breach of this resistance is not ruled out, but a sustained rise above this level is unlikely. The major resistance at 151.90 is also unlikely to come into view today. To sustain the overbought momentum, USD must remain above 150.05, with minor support at 150.40."
1-3 WEEKS VIEW: "After maintaining a negative USD view since the middle of Feb (see annotations in the chart below), we cautioned last Friday (28 Feb, spot at 149.60) that 'downward momentum is slowing.' We added, 'if USD breaks above 150.20 (‘strong resistance’ level), it would mean that the weakness has stabilised.' That said, we did not expect the strong rise in USD that sent it to a high of 150.98. Not only has downward momentum faded, but upward momentum has increased somewhat. We view the current price movement as part of a rebound that could potentially reach 151.90. On the downside, should USD breach the ‘strong support’ level, currently at 149.45, it would suggest that it is likely to trade in a range instead of rebounding further."
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