In opinion of FX Strategists at UOB Group, USD/JPY faces the next hurdle at 116.50 ahead of 116.80 in the next weeks.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘the resistance at 115.80 is unlikely to come under threat’.  However, USD cracked 115.80 with ease and soared to 116.34. Further USD strength is not ruled out but deeply overbought conditions suggest that 116.50 could be out of reach for today. Support is at 115.90 followed by 115.70.”

Next 1-3 weeks: “On Monday (03 Jan, spot at 115.20), we highlighted, there is room for USD to edge above Nov’s peak near 115.50. We added, ‘barring a surge in momentum, a sustained rise above this level appears unlikely’. In other words, we did not expect the manner by which USD surged to a high of 116.34 yesterday. The boost in momentum is likely to lead to further USD strength. The next resistance is at 116.50 followed by 116.80. On the downside, a breach of 115.30 (‘strong support’ level was at 114.80 yesterday) would indicate that the current upward pressure has eased.”