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USD/JPY’s upside momentum could reach and surpass the 106.00 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The manner by which USD lifted off and rocketed to an overnight high of 105.64 came as a surprise. The strong and rapid rally appears to be overdone and while a move above the overnight high is not ruled out, the next resistance at 106.10 is unlikely to come into the picture. On the downside, support is at 104.80 followed by 104.40.”

Next 1-3 weeks: “We indicated yesterday (09 Nov, spot at 103.30) that USD ‘is still under pressure’ and added, ‘a daily closing below 103.00 could lead to further weakness to 102.55’. However, the 103.00 level remain untested (low of 103.18) as USD lifted off suddenly and surged to a high of 105.64 before closing at 105.36 (+1.96%, its biggest 1-day gain since March). The sudden surge and outsized expansion in range has clouded the outlook but strong shorter-term momentum suggests that there is room for the current strong advance in USD to test the major resistance at 106.10. Support is at 104.40 but only a break of 104.00 (‘strong support’ level) would indicate that USD is not ready for 106.10.”