A break out of the 107.00 mark should allow USD / JPY to climb further in the short term, suggested FX strategists from UOB Group.
24 Hour View: “Yesterday we pointed out that the USD ‘may climb towards 106.25’, but we felt that ‘a sustained advance above this level is not expected’. The subsequent pace and magnitude of the USD’s strength exceeded our expectations, climbing to an overnight high of 106.57. Although the rapid advance still appears to be continuing, there is no sign of weakness yet. From here there is room for the USD to test major resistance at 106.70 but a clear break out of that level is unlikely (next resistance is at 107.00). Support is at 106.15 followed by 105.90. “
1 to 3 weeks ahead: “We pointed out on Monday (August 24, spot at 105.80) that the USD ‘is still consolidating and is expected to trade between 105.00 and 106.70’. The upside momentum is starting to improve as the USD hit a high of 106.57 yesterday. While a move above 106.70 is not ruled out, further strength in the USD is only likely if it closes above major resistance at 107.00. At this point, the prospect of such a scenario is not high but would increase as long as the USD does not move below 105.60 in those few days.