UOB’s Quek Ser Leang and Lee Sue Ann note that USD/JPY has stalled into sideways trade after failing to extend losses, with intraday momentum indicators flat. On a 1–3 week view, they still hold a positive US Dollar (USD) bias above strong support, but acknowledge slowing upside momentum. Over the medium term, they see scope for new highs without challenging the 2024 high of 162.00.

Dollar-Yen holds above key support

"24-HOUR VIEW: While we indicated yesterday that “there is a chance for USD to test 158.70,” we stated that “a continued decline below this level is unlikely, and the strong support at 158.40 is unlikely to come under threat.” The subsequent price movements did not unfold as expected. USD dipped briefly to 158.74 and then traded mostly sideways for the rest of the sessions. Momentum indicators are mostly flat, and further sideways-trading appears likely, probably between 158.75 and 159.20."

"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. Looking ahead, should USD break and hold above 159.25, it could lead to a move to 159.65."

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