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USD/JPY faces a potential climb to the mid-106.00s in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sudden surge in USD that sent it a high of 106.10 came as a surprise. While the rapid rise appears to be running ahead of itself, there is room for USD to test 106.25 first before a more sustained pull-back can be expected. For today, the next resistance at 106.50 is not expected to come into the picture. Support is at 105.80 but only a move below 105.60 would indicate the current upward pressure has eased.”

Next 1-3 weeks: “After trading within a 105.00/105.75 range for more than a week, USD popped to a high of 106.10 yesterday (07 Oct) before closing on a firm note at 105.96. Upward momentum has improved, albeit not by all that much. From here, USD is expected to trade with an upward bias towards 106.50. At this stage, the odds for a sustained rise above this level are not high. On the downside, a break of 105.40 (‘strong support’ level) would indicate that our view for a higher USD is wrong.”