Further upside in USD/JPY is expected to gather fresh traction once 131.15 is cleared, comment Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: “Yesterday, we expected USD to ‘consolidate within a range of 129.35/130.30’. We did not expect the elevated volatility as USD dropped sharply to 129.18 before rebounding quickly to end the day at 130.44 (+0.45%). The rebound from the low has room to extend but a sustained advance above 130.80 appears unlikely (the next resistance is at 131.15). On the downside, a breach of 129.70 (minor support is at 130.05) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “In our most recent narrative from last Thursday (26 Jan, spot at 129.25), we highlighted that the movement in USD is likely part of a consolidation phase and we expected USD to trade within a range of 128.00/130.80. Yesterday, USD rose to a high of 130.59 and upward momentum is showing signs of increasing. However, USD has to break above 131.15 before a sustained advance is likely. The chance of USD breaking above 131.15 will remain in place as long as USD stays above 129.30 within the next few days. Looking ahead, the next resistance level above 131.15 is at 132.00.”