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According to FX Strategists at UOB Group, USD/JPY now shifts the attention to a potential move to the 109.85 level in the next weeks.

Key Quotes

24-hour view: “We expected USD to strengthen yesterday but we were of the view ‘overbought conditions suggest the resistance at 109.00 is unlikely to come into the picture’. USD rose to 108.94 before extending its gains above 109.00 after the close in NY. While severely overstretched, the rally could grind higher to 109.50. The next resistance at 109.85 is likely out of reach. On the downside, the support at 108.50 is expected to act as a floor for today (minor support is at 108.80).”

Next 1-3 weeks: “We have expected USD to move higher for more than a week now. In our latest narrative from yesterday (08 Mar, spot at 108.35), we held the view that ‘further USD strength still appears likely but overbought shorter-term conditions suggest 109.00 may not come into the picture so soon’. We underestimated the strength of the rally as USD surged above 109.00 after NY close. The outlook for USD is still clearly positive and the next level to focus on is at 109.85. Overall, the current positive outlook is deemed intact as long as USD does not move below 108.00 (‘strong support’ level was at 107.35 yesterday).”