In light of the recent price action, USD/JPY could now be poised to advance further and visit the 116.65 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden and rapid surge in USD to 116.33 and the subsequent rapid pullback came as a surprise (we were expecting sideway-trading). Despite the rapid pullback from the high, the underlying tone still appears to be a tad firm. That said, a sustained rise above the major resistance at 116.35 is unlikely (next resistance is at 116.60). Support is at 115.90 followed by 115.70.”

Next 1-3 weeks: “Yesterday (10 Feb, spot at 115.45), we highlighted that while upward momentum has improved somewhat, USD has to break 115.80 before a sustained advance can be expected. We added, ‘looking ahead, the next resistance above 115.80 is at 116.10 followed by 116.35’. We did not expect the sped-up price actions where USD surged to a high of 116.33. Upward momentum has improved further and a clear break of 116.35 is likely to lead to further USD advance to 116.65. On the downside, a breach of 115.40 (‘strong support’ level was at 115.00) yesterday would indicate that the current upward pressure has eased.”