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USD/JPY is expected to accelerate its upside on a breakout of the 106.00 level, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to strengthen yesterday but held the view that ‘a clear break of 106.00 is unlikely’. While USD strengthened as expected, it dropped back quickly after touching a high of 105.80.The swift pull-back from the high amid improving downward momentum suggests the bias for today is tilted to the downside. From here, barring a move above 105.80 (minor resistance is at 105.65), USD could edge downward to 105.25, with lower odds for extension to 105.10.”

Next 1-3 weeks: “Our latest narrative was from last Friday (25 Sep, spot at 105.45) wherein USD ‘is in a correction phase but a sustained advance is likely only if there is a clear break of 106.00’. Shorter-term momentum is beginning to improve and from here, if USD were to close above 106.00, it could trigger a stronger recovery to 106.45. The probability for such a scenario is not that high for now but it would improve quickly as long USD does not move below 105.10 within these few days.”