Introduction
The USD/JPY currency pair has been on an upward trend in recent months, with the pair reaching a high of 110.96 in early April 2023. According to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, this upward momentum is likely to continue, with the pair’s upside target remaining at the 134.80 region for the time being.
USD/JPY Technical Analysis
In their report, UOB Group’s experts highlighted the technical analysis of the USD/JPY currency pair. They noted that the pair has been trading above its 50-day moving average since February 2023 and that the pair’s momentum remains bullish. Additionally, the pair has recently broken above a key resistance level at 110.00, which further reinforces the bullish sentiment.
According to the experts, the next key resistance level for the pair is at 114.00, but they believe that the upside target for the time being remains at the 134.80 region. This level represents a 61.8% Fibonacci retracement level of the pair’s decline from the 147.66 level in December 2016 to the 75.56 level in March 2020.
Factors Affecting USD/JPY
The UOB Group’s experts also noted several factors that could potentially affect the USD/JPY currency pair. One of the main drivers of the pair’s upward momentum is the US Federal Reserve’s monetary policy. The Fed has signaled that it will maintain its accommodative monetary policy stance for the time being, which could weaken the US dollar and boost the value of the yen.
Another factor that could affect the USD/JPY currency pair is the ongoing COVID-19 pandemic. If the pandemic continues to worsen or if there are new variants that are more contagious or deadly, it could lead to increased risk aversion among investors and a flight to safe-haven assets like the yen.
Conclusion
In conclusion, UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang believe that the USD/JPY currency pair’s upside target remains at the 134.80 region for the time being. This is based on the technical analysis of the pair, which shows that the momentum remains bullish, and the key resistance level has been broken. However, there are several factors that could potentially affect the pair’s performance, including the US Federal Reserve’s monetary policy and the ongoing COVID-19 pandemic. Investors should closely monitor these factors and adjust their trading strategies accordingly.
