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UOB Group’s FX Strategists keep the bullish view on USD/JPY, with the next target at the 110.95 level in the next weeks.

Key Quotes

24-hour view: “While we expected USD to strengthen yesterday, we were of the view that ‘any advance is still unlikely to challenge the major resistance at 110.35’. In other words, we did not anticipate the sharp surge in USD that sent it a high of 110.71. 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. On the downside, a break of 110.25 (minor support is at 110.45) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Two days ago (15 Jun, spot at 110.05), we noted that ‘risk is beginning to shift to the upside but USD has to close above the major resistance at 110.35 before a sustained advance can be expected’. We added, ‘the next resistance is at 110.60 followed by 110.95’. While our view for an upside risk is not wrong, we did not anticipate the rapid pace of advance as USD soared to an overnight high of 110.71. The level to focus on now is at the year-to-date high near 110.95. If USD can close above this level, there is a good chance for it to advance further to 111.25. The upside risk remains intact as long as USD does not move below 110.00 (‘strong support’ level was at 109.60 yesterday).”