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USD/JPY appears to have left the negative phase behind, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to trade sideways between 104.20 and 104.90 yesterday. However, USD rose to an overnight high of 105.07 before extending its gains this morning. While upward momentum has not improved by much, there is room for USD to breach the strong resistance at 105.20. For today, the next resistance at 105.50 is not expected to come into the picture. Support is at 104.75 followed by 104.50.”

Next 1-3 weeks: “We have held a negative view in USD since early last week. In our latest narrative from Monday (21 Sep, spot at 104.55), we held the view that USD ‘could dip below 104.16 but oversold conditions suggest that a sustained decline below this level is unlikely’. We added, ‘the weakness in USD appears to be overstretched but only a break of 105.20 (‘strong resistance’ level was previously at 105.50) would indicate that the negative phase has run its course’. USD subsequently dropped to a low of 103.99 before rebounding strongly over the past two days. While 105.20 is still intact, the rapid loss in momentum indicates that the negative phase has run its course. The current movement is viewed as the early stages of a correction phase. From here, USD could edge higher but any advance is viewed as part of 104.25/105.75 range (for now, a sustained rise above 105.75 is not expected).”