UOB Group’s FX Strategists noted that USD/JPY is still expected to advance to the mid-116.00s in the next weeks amidst the current upbeat momentum.

Key Quotes

24-hour view: “We highlighted yesterday that ‘further USD strength is not ruled out but deeply overbought conditions suggest that 116.50 could be out of reach’. However, USD pulled back to 115.63 before rebounding to 116.24 during NY session. Despite the rebound, upward momentum has not improved by much. From here, USD could edge higher but any advance is unlikely to break 116.50 today. Support is at 115.90 followed by 115.65.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (05 Jan, spot 116.15). As highlighted, the strong surge in USD earlier this week has boosted the upward momentum and USD could strengthen further. The next resistance is at 116.50 followed by 116.80. On the downside, a breach of 115.30 (no change in ‘strong support’ level from yesterday) would indicate that the current upward pressure has eased.”