UOB Group’s FX Strategists noted that the upside pressure in USD/JPY could be alleviated in case the pair breaks below the 115.30 level.

Key Quotes

24-hour view: “We highlighted yesterday that ‘despite the rebound, upward momentum has not improved by much’. We added, USD ‘could edge higher but any advance is unlikely to break 116.50 today’. Our expectations for USD to edge higher did not materialize as it traded sideways between 115.61 and 116.18. Momentum indicators are mostly neutral and USD could continue to trade sideways. Expected range for today, 115.55/116.20.”

Next 1-3 weeks: “On Wednesday (05 Jan, spot 116.15), we highlighted, the strong surge in USD earlier this week has boosted the upward momentum and USD could strengthen further. Since then, USD has not been able to make any headway on the upside as it traded sideways the past couple of days. While upward momentum has eased somewhat, only a breach of 115.30 (no change in ‘strong support’ level from yesterday) would indicate that USD is not ready to head higher to 116.50.”