The continuation of the upside momentum could lift USD/JPY to the 139.00 region in the next few weeks, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “While we expected USD to rise further yesterday, we held the view that ‘a clear break above 136.80 is unlikely’. We did not anticipate the sharp rally as USD surged to a high of 137.71. Today, USD could break above the month-to-date high near 137.80 but in view of the severely overbought conditions, it might not be able to maintain a foothold above this level. The next major resistance at 139.00 is unlikely to come under threat. Support is at 137.10, followed by 136.70.”

Next 1-3 weeks: “Three days ago on Monday (15 May, spot at 135.80), we indicated that the risk for USD ‘has shifted to the upside’. We noted, there is solid resistance at 136.80 ahead of the early May high near 137.80. USD rose for the past few days and yesterday (17 May), it soared to a high of 137.71. While 137.80 remains solid resistance, a break of this level is not ruled out and would shift the focus to 139.00. In view of the severely overbought conditions, we expect the pace of any further advance to be slower. All in all, only a breach of 136.00 (‘strong support’ level previously at 135.30) would indicate the current upward pressure has eased