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The ongoing rebound in USD/JPY has scope to reach the 107.90 area in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected “further USD strength” last Friday but it staged a sharp and rapid drop that touched 106.61. Despite the subsequent strong rebound from the low, momentum indicators are patchy at best. The current price action is viewed as part of consolidation phase. In other words, USD is expected to trade sideways, likely between 106.70 and 107.20″.

Next 1-3 weeks: “After trading in an ‘undecided’ manner for several days, USD surged above the top of our expected 105.00/107.00 sideway trading range (high of 107.22). Despite the relatively strong advance, upward momentum has not improved by that much. For now, we view the current movement as a ‘rebound’ that has scope to extend to 107.90. At this stage, the prospect for a sustained rise above 107.90 is not high. On the downside, a break of the strong 106.30 support would indicate the current upward pressure has eased”.