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USD/JPY could re-test the 109.85 level if 109.50 is cleared in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we noted that ‘the underlying tone has firmed somewhat’ and we held the view that USD ‘could advance but is unlikely to challenge the resistance at 109.25’. Our view was not wrong as USD rose to 109.23 before edging above 109.25 after NY close. Upward momentum is beginning to improve and USD could continue to edge higher but the major resistance at 109.50 is likely out of reach. Support is at 108.95 followed by 108.75.”

Next 1-3 weeks: “We have expected USD to ‘consolidate and trade between 108.20 and 109.50’ since the beginning of the week. Shorter-term upward momentum is beginning to improve but USD has to close above 109.50 before a move towards 109.85 can be expected. The prospect for a higher USD is not high for now but would increase as long as USD does not move below 108.50 within these few days.”