The recent solid performance of USD/JPY could extend to a test of the 112.20 region, argued FX Strategists at UOB Group.
24-hour view: “While we detected the improved upward momentum yesterday and indicated that USD could ‘advance towards 109.50’ we did not anticipate the sudden surge that sent USD to a high of 110.94. USD extended its gain after NY close and from here, it is likely eyeing last month’s top near 112.20. Support is at 110.50 followed by 110.00.”
Next 1-3 weeks: “While we highlighted yesterday that USD ‘is expected to advance to 110.50’, the sudden surge in USD that sent it quickly to a high of 110.94 was not exactly expected. USD closed on a very strong note at 110.69 (+2.43%) and as indicated yesterday, ‘if USD can close above 110.50, it could extend further towards the Feb’s peak near 112.20’. The resistance level of note above 112.20 is nearer to 114.00. On the downside, the ‘strong support’ level has moved higher to 107.50 from yesterday’s level of 106.80.”