Japanese Yen: Weakness may deepen toward 159.05 against US Dollar – UOB

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note USD/JPY continues to grind higher as wide US‑Japan yield differentials weigh on the Japanese Yen (JPY). Intraday, the pair is expected to hold within 158.20–158.80. Over the next 1–3 weeks, upward momentum is starting to build, with scope for an advance toward 159.05, provided the pair holds above strong support at 157.85.

Dollar-Yen bias tilts higher near recent highs

"24-HOUR VIEW: When USD was at 158.25 in the early Asian session yesterday, we noted that “the underlying has firmed somewhat.” We indicated that USD “could trade in a higher range of 157.90/158.55.” We did not expect USD to rise to a high of 158.75. Despite the relatively sharp rise, upward momentum has not strengthened much. Today, USD is likely to trade within a range of 158.20/158.80."

1-3 WEEKS VIEW: Tracking our range-trading view in USD since early this month, we highlighted last Friday (09 Oct, spot at 158.05) that “we continue to expect USD to trade in a range, but a narrower 157.00/158.70 range is likely to contain price movements for now.” Yesterday, USD rose to a high of 158.75. Upward momentum is starting to build, and from here, USD could edge higher toward 159.05. USD must break clearly above this level before further sustained rise is likely. To sustain the momentum build-up, USD must hold above the ‘strong support’ level, now at 157.85"