Further gains in USD/JPY now face the next hurdle at the 120.40 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is room for USD to test 119.45 first before easing off’. USD subsequently rose to 119.49 before closing on a firm note at 119.47 (+0.25%). USD rose above the major resistance at 120.00 during early Asian hours and the rapid improvement in momentum is likely to lead to further USD strength. The next resistance is at 120.40. Support is at 119.60 followed by 119.30.”

Next 1-3 weeks: “We have expected a higher USD for more than a week now. In our latest narrative from yesterday (21 Mar, spot at 119.20), we indicated that the chance for USD to rise above 119.70 has increased. USD not only rose above 119.70 during early Asian hours but also edged above 120.00. Further USD strength is not ruled out but deeply overbought conditions suggest a slower pace of advance from here. The next resistance is at 120.40. Overall, only a breach of 118.90 (‘strong support’ level was at 118.30 yesterday) would indicate that the current strong upward pressure has eased.”