In light of the recent price action, further strength in USD/JPY should not be ruled out, comment Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: “We indicated yesterday that ‘further USD gains are possible but the major resistance at 133.35 might not come into view today’. Our expectations were not wrong as USD rose to high of 132.90. Upward momentum has eased somewhat and this coupled with overbought conditions suggests USD is unlikely to advance much further. We expect USD to trade sideways today, likely within a range of 131.80/133.00.”

Next 1-3 weeks: “Our view from yesterday (06 Feb, spot at 132.30) still stands. As highlighted, the outsized advance in USD last Friday and the corresponding sharp increase in upward momentum suggest it could rise further. The levels to watch are at 133.35 and 134.75. In order to keep the strong momentum going, USD must stay above the ‘strong support’ level at 130.20 (level was at 129.80 yesterday).”