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UOB Group’s FX Strategists see USD/JPY expected to meet a tough hurdle in the 104.75 level in the next weeks.

Key Quotes

24-hour view: “The sudden and strong surge in USD came as a surprise. While the rapid rise appears to be running ahead of itself, USD could move above the month-to-date high near 104.40. For today, a rise beyond 104.75 is unlikely. Support is at 104.00 followed by 103.75.”

Next 1-3 weeks: “We have held the same view since last Thursday (21 Jan, spot at 103.55) wherein ‘the bias for USD is tilted to the downside but any weakness is likely limited to a test of 103.00’. We highlighted that ‘a break of 104.20 would indicate the current mild downward pressure has eased’. We did anticipate the sudden surge in USD yesterday as it soared to 104.19 before extending its advance this morning. The rapid improvement in momentum has shifted the risk the upside towards 104.75. This is a rather solid resistance and may not yield so easily. The current positive outlook is deemed as intact as intact as long as USD does not move below 103.50. On a shorter-term note, 103.75 is already a strong level.”