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UOB Group’s FX Strategists noted the shift in sentiment could propel USD/JPY to the 106.20 zone and beyond.

Key Quotes

24-hour view: “Our expectation for USD to ‘trade within a 105.00/105.50 range’ was wrong as it surged to 106.10 before easing off slightly to close at 105.86 (+0.59%). Strong momentum is likely to lead to further USD strength and a break of last week’s peak near 106.20 would not be surprising. The next resistance at 106.70 is likely out of reach. Support is at 105.65 followed by 105.35.”

Next 1-3 weeks: “Our view from two days ago (23 Feb, spot at 105.00) where USD ‘could test the month-to-date low at 104.40’ was proven wrong quickly as USD blew past our ‘strong resistance’ level at 105.65 (high has been 106.10). The sharp and rapid turnaround has shifted the risk to the upside. Barring a move below the ‘strong support’ at 105.20, USD could advance towards 106.20, possibly as high as 106.70.”

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