USD/JPY: gains look capped near 110.70 – UOB

FX Strategists at UOB Group hinted at the idea that the upside in USD/JPY could struggle around the 110.70 region.

Key Quotes

24-hour view: “Our expectation of ‘sideways trade, between 109.50 and 110.20’ was realized on Wed, with USD keeping to a narrower 109.77 - 110.01 range. Still no indication on the next move yet. So, consolidation still remains base case for today, within 109.55 – 110.20”.

Next 1-3 weeks: “The relative ease of how USD took out its key resistance at 109.75 means that USD bulls remain fully in charge. While our oscillators are showing the most overbought conditions in over a year, it appears that there is still scope for a further rally to test May 2019’s highs at 110.67 before a corrective phase can begin. On the downside, expect support at 109.60 and only a move below 108.90 would indicate a short-term top has been put in place”.