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FX Strategists at UOB Group believe USD/JPY could be headed to the 110.40 area in the near term.

Key Quotes

24-hour view: “We expected USD to ‘extend its gains’ last Friday but were of the view “108.75 could be out of reach”. USD subsequently rose to 108.67 and closed at 108.45 but has since moved above 108.75 this morning. Rapid improvement in upward momentum suggests further USD gains towards 109.40 from here. The next resistance at 110.00 is likely out of reach. Support is at 108.40 followed by 108.00.”

Next 1-3 weeks: “We highlighted last Friday (03 Apr, spot at 108.00) that ‘risk of a short-term bottom has increased’. The breach of the 108.75 ‘strong resistance’ level earlier this morning indicates that last Tuesday (01 Apr) low of 106.89 is a short-term bottom. The near-term bias is for USD to test the 110.40 level from here. A clear break of this level would indicate USD could extend towards last month’s top at 111.71. On the downside, only a breach of 107.30 (‘strong support’ level) would indicate that the current upward pressure has eased.”