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USD/JPY is seen advancing to the 106.00 area in the next weeks, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “We highlighted last Friday that ‘there is room for USD extend its gains but the major resistance at 106.00 is unlikely to come into the picture’. We added, ‘105.80 is already quite a strong level’. Our view was not wrong as USD rose to 105.76 before easing off. The current movement is viewed as part of a consolidation phase and USD is likely to trade between 105.25 and 105.75 for today.”

Next 1-3 weeks: “We have expected USD to strengthen since last week. Our latest narrative was from Tuesday (02 Feb, spot at 104.85) where we highlighted that ‘upward momentum has improved slightly and while the outlook for USD is still positive, the major resistance at 105.40 may not come into the picture so soon’. In that sense, we did not quite expect the sudden surge in USD yesterday (04 Feb) that sent it soaring to 105.56. Further USD strength appears likely and the next level to focus on is at 106.00. The positive outlook is deemed intact as long as USD does not move below 104.80 (‘strong support’ level previously at 104.50).”