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In opinion of FX Strategists at UOB Group, USD/JPY could have charted a temporary top in the 112.20 region (February 20th).

Key Quotes

24-hour view: “The sudden and sharp plunge in USD was unexpected as it plunged to an overnight low of 110.32. While the rapid drop appears to be running ahead of itself, the vastly improved downward momentum suggests it is too early to expect a sustained recovery. USD is more likely to consolidate and trade within a relatively broad 110.30/111.30 range.”

Next 1-3 weeks: “We highlighted yesterday (24 Feb) that ‘if USD were to break 111.20, it would indicate it need more time to muster enough momentum to challenge to the critical 112.40 level’. However, the manner by which USD cracked 111.20 and the subsequent plunge to a low of 110.32 came as a surprise. The price action suggests that last Thursday’s (20 Feb) high of 112.21 is a top, albeit likely a temporary one. From here, USD could continue to trade in volatile manner but is expected to stay to within last week’s broad 109.64/112.21 for a while.”