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The recent solid performance of USD/JPY could extend to a test of the 112.20 region, argued FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we detected the improved upward momentum yesterday and indicated that USD could ‘advance towards 109.50’ we did not anticipate the sudden surge that sent USD to a high of 110.94. USD extended its gain after NY close and from here, it is likely eyeing last month’s top near 112.20. Support is at 110.50 followed by 110.00.”

Next 1-3 weeks: “While we highlighted yesterday that USD ‘is expected to advance to 110.50’, the sudden surge in USD that sent it quickly to a high of 110.94 was not exactly expected. USD closed on a very strong note at 110.69 (+2.43%) and as indicated yesterday, “if USD can close above 110.50, it could extend further towards the Feb’s peak near 112.20”.