Further upside could prompt USD/JPY to revisit the 134.80 region in the next weeks, note Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group.

Key Quotes

24-hour view: “Last Friday, we held the view that USD ‘has scope to test 132.00 again before a sustained recovery is likely’. USD dropped to 132.15 in Asian trade and then bounced strongly to 133.84 in NY session. Upward momentum is strong and USD is likely to strengthen further. In view of the overbought conditions, the major resistance level at 134.80 could be out of reach today. On the downside, a break of 133.25 (minor support is at 133.50) would indicate that USD is not strengthening further.”

Next 1-3 weeks: “We highlighted last Friday (14 Apr, spot at 132.60) that USD ‘appears to have moved into a consolidation phase and is likely to trade between 131.20 and 133.70 for now’. We did not expect the sharp and rapid bounce as USD soared to 133.84 in NY trade. While it is too early to expect the start of a sustained advance in USD, it is likely to trade with an upward bias to 134.80. Looking ahead, it has to break clearly above this level before further gains can be expected. Overall, only a breach of 132.70 (‘strong support’ level) would suggest that USD is not advancing to 134.80.”