UOB said USD\/JPY kept an upside bias over the next 24 hours, after the pair briefly dipped to 162.05, rose to 162.70, and then closed at 162.58, up 0.30%. The bank sees room for a test of 162.80 before any pullback, while judging the 163.00 resistance level unlikely to come into play. On the downside, support was set at 162.35, and a break of 162.20 would point to range trading rather than a push towards 162.80.<\/p>\n
Over a 1\u20133 week horizon, UOB maintained a mixed outlook and expects the pair to trade between 160.60 and 163.00; it referenced its 07 Jul update when spot was 162.10 and said volatility has since eased without altering that view. Over 1\u20133 months, the advance is viewed as intact provided USD\/JPY holds above the 21-day EMA at 161.00.<\/p>\n
We see the US dollar maintaining its strength against the yen, with a potential test of the 162.80 level in the coming days. This move is supported by this week’s US jobs report, which showed the addition of 210,000 non-farm payrolls, dampening expectations for an imminent Federal Reserve rate cut. The wide interest rate differential between the US and Japan therefore remains the key market driver.<\/p>\n
For traders looking to capture this short-term move, we are considering buying weekly call options with a strike price around 162.50. However, significant resistance at the 163.00 level suggests that any gains might be capped there. This makes selling call options with a 163.00 strike, creating a call spread, an attractive strategy to limit costs and define risk.<\/p>\n
In the coming weeks, we anticipate the pair will trade within a 160.60 to 163.00 range, as the threat of intervention from Japan’s Ministry of Finance will likely curb excessive yen weakness. Looking back at the interventions in late 2024, authorities showed a low tolerance for moves beyond the 160 level. This expected range-bound activity makes strategies like selling strangles or iron condors particularly appealing to collect premium.<\/p>\n
We are watching the 21-day exponential moving average, currently around 161.00, as a critical support level. A decisive break below this would signal that the recent upward momentum is failing, potentially opening a move towards the 160.60 lower boundary. To hedge against this, we are holding some long put options as protection for our bullish positions.<\/p>\n\n\n\n