USD/JPY: The next level to watch is 163.00 above 162.00 – UOB Group

The US Dollar (USD) strength remains intact. It could test the resistance at 162.00 before the risk of a pullback increases. If it breaks above 162.00, the next level to watch is 163.00, UOB Group FX strategists note.

Strong support moves to 160.30 from 159.80

24-HOUR VIEW: “We expected USD to trade with an upward bias yesterday. However, we indicated that ‘it is left to be seen if any advance can break above 161.50.’ We also indicated that ‘the next resistance at 162.00 is unlikely to come into view.’ USD subsequently rose, reaching a high of 161.73 before closing at 161.45 ( 0.39%). Conditions are overbought, but as long as USD remains above 161.00 (minor support is at 161.30), it could test the resistance at 162.00 before the risk of a pullback increases. A sustained break above 162.00 appears unlikely today.”

1-3 WEEKS VIEW: “We have expected a higher USD since the middle of last month. In our update from yesterday (01 Jul, spot at 161.00), we indicated that ‘conditions remain oversold, but as long as 159.80 is not breached, USD is likely to continue to rise.’ We added, ‘the next resistance level above 161.50 is 162.00.’ We did not expect USD to overcome 161.50 so soon, as it rose to a high of 161.73. We continue to hold a positive USD view. If USD breaks above 162.00, the next level to watch is 163.00. On the downside, the ‘strong support’ level has moved higher to 160.30 from 159.80.”