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Further gains in USD/JPY are likely beyond the 110.60 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the overbought rally in USD has room to extend but it is unlikely able to maintain a foot hold above the year-to-date high near 110.95’. However, instead of breaking 110.95, USD fell sharply to 110.15. Upward pressure has dissipated and the current movement is viewed as part of a consolidation phase. For today, USD is expected to trade between 110.10 and 110.60.”

Next 1-3 weeks: “Yesterday (17 Jun, spot at 110.65), we noted that ‘upside risk remains intact and the level to focus on now is at the year-to-date high near 110.95’. We did not quite anticipate the overnight drop to 110.15. While our ‘strong support’ level at 110.00 is still intact, upward momentum has been dented. In order to rejuvenate the waning momentum, USD has to move and stay above 1106.60 within these couple of days or the odds for USD to break above 110.95 would diminish. Conversely, a break of 110.00 would indicate that USD is not ready to move above 110.95.”