UOB’s Quek Ser Leang and Lee Sue Ann note USD/JPY pulled back sharply after closing at 159.19, with scope to test 158.70 while a sustained drop below that level and 158.40 strong support is seen as unlikely. They maintain a positive medium-term view, noting that a rise above 159.45 is possible, though any further advance is unlikely to threaten the 2024 high at 162.00.

Dollar-Yen holds gains as support watched

"24-HOUR VIEW: Last Thursday, USD rose to 159.34 and then pulled back to close largely unchanged at 158.96 (+0.03%). When USD was at 159.05 on Friday, we indicated that “the brief advance did not result in any increase in upward momentum,” and we expected USD to “trade between 158.80 and 159.25.” We were not wrong, even though USD traded within a narrower range than expected (158.87/159.23). USD closed at 159.19 (+0.14%) but it dropped sharply today. Despite the decline, downward momentum has not increased much. That said, there is a chance for USD to test 158.70. A continued decline below this level is unlikely, and the strong support at 158.40 is unlikely to come under threat. Resistance levels are at 159.05 and 159.25."

"1-3 WEEKS VIEW: We have held a positive USD view since the middle of the month. In our most recent narrative from last Thursday (21 May, spot at 158.85), we highlighted that “upward momentum continues to slow, and a breach of 158.40 (‘strong support’ level) would shift the outlook for USD from positive to neutral.” We continue to hold the same view for now."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)