Further upside momentum could motivate USD/JPY to challenge the 137.90 region ahead of a potential move to 138.50 in the next weeks, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “USD extended its rally from last Friday as it soared by 0.88% (NY close of 137.48). While the two days of rapid rise appear to be overdone, there is room for USD to advance further. In view of the deeply overbought conditions, a sustained rise above the Mar high near 137.90 is unlikely. Support is at 137.00, followed by 136.60.”

Next 1-3 weeks: “Last Thursday (26 Apr, spot at 133.60), we held the view that USD has moved into a consolidation phase and is likely to trade in a range of 132.85/134.70 for the time being. We did not anticipate the outsize advance as USD surged on Friday and extended its rally yesterday. USD is likely to strengthen further and the focus is at Mar high near 137.90. A break of this major resistance will shift the focus to 138.50. In view of the deeply overbought short-term conditions, any further USD advance is likely to be at a slower pace. Overall, only a break of 136.00 would indicate that USD is not advancing further.”