USD/JPY short-term top in place? – UOB

FX Strategists at UOB remain bullish on the pair, hinting at the likeliness that a short term top could be in place.

Key Quotes

24-hour view: “We expected USD to 'struggle' to move above the 113.25 resistance last Friday but it easily took out this level to hit a high of 113.43. The rally was however, short-lived as USD dropped sharply from the high. The drop appears to have scope to extend lower but a sustained move below 112.20 seems unlikely (next support is at 112.00). Resistance is at 112.85 followed by 113.10. The 113.43 high is not expected to come into the picture, at least not for today”.

“While USD broke above the 113.25 resistance on Friday (high of 113.43), the rapid and sharp pull-back from the high does not bode well for our current bullish view. The risk of a short-term top has increased but only a break below 112.20 (stop-loss level unchanged) would indicate that the bullish phase that started more than a week ago has ended. This would not be surprising unless USD can move and stay above 113.10 within these 1 to 2 days”.