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In opinion of FX Strategists at UOB Group, USD/JPY is now targeting the 109.30 area in the near term.

Key Quotes

24-hour view: “USD traded mostly sideways yesterday before suddenly surging to a high of 108.89 during NY hours. The rapid rally is running ahead itself and while USD could edge above the strong 109.00 level, the August’s peak near 109.30 is not expected to come into the picture, at least for today. Support is at 108.60 followed by 108.40″.

Next 1-3 weeks: “We highlighted on Monday (14 Oct, spot at 108.35) that “while the advance appears to be running ahead of itself, the risk is for further USD strength to 109.00″. USD soared to 108.89 yesterday (15 Oct) before ending the day on a solid note at 108.84. The positive outlook is still clearly intact and if USD were to break above 109.00, the next level to focus on is at the August’s peak near 109.30. In view of the overbought conditions, USD could ill afford to dither as a consolidation at these elevated levels would quickly increase the risk of a shortterm top. On the downside, a break of 108.10 (‘strong support’ level previously at 107.50) would indicate the current upward pressure has eased”.