In light of the recent price action, USD/JPY could now attempt an assault to the 116.00 area in the next weeks, comment FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that USD ‘could edge above the major resistance at 115.25 but a sustained rise above this level is unlikely’. We added, ‘the next resistance is at 115.55’. The subsequent USD strength exceeded our expectations as it soared to within a few pips of 115.55 (high of 115.51). Deeply overbought conditions suggest that USD is unlikely to strengthen much further. For today, USD is more likely to consolidate and trade between 115.00 and 115.55.”

Next 1-3 weeks: “We have expected USD to strengthen since Tuesday. As USD rose, we highlighted yesterday (24 Nov, spot at 115.10) that ‘while upward momentum has improved, conditions are overbought and USD has to close above 115.25 before an advance to 115.55 can be expected’. USD subsequent rose to 115.51 before closing on a firm note at 115.41. Further USD strength appears likely but overbought conditions could lead to 1 to 2 days of consolidation first. Looking ahead, a break of 115.55 would shift the focus to 116.00. On the downside, a break of 114.60 (‘strong support’ level was at 114.30 yesterday) would indicate that the current upward pressure has eased.”