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USD/JPY faces a potential move to the 104.60 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted last Friday that ‘risk is for USD to continue to move higher but odds for a break of the major resistance at 104.25 are not high’. Our expectation did not quite materialize as USD traded between 103.59 and 104.08. Upward momentum is beginning to improve after USD traded on a firm note after opening this morning. From here, USD could break the strong resistance at 104.25 but the major level at 104.60 is likely out of reach. Support is at 103.80 followed by 103.60.”

Next 1-3 weeks: “We highlighted yesterday (07 Jan, spot at 103.80) that ‘the outlook is mixed and USD could trade between 102.50 and 103.65 for a period of time’. The subsequent surge that sent USD to 103.95 came as a surprise. The rapid improvement in momentum indicates further USD strength from here. A break of the major resistance at 104.25 could potentially lead to further rapid rise in USD towards 104.60. Overall, USD is expected to trade on a firm footing as long as it holds above 103.00 (‘strong support’ level).”