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FX Strategists at UOB Group keep the bullish outlook on USD/JPY and suggested a potential move to the 109.00 yardstick and beyond.

Key Quotes

24-hour view: “Our expectation for USD to ‘edge above 109.00’ did not materialize as it touched an overnight high of 108.98 before settling on a firm note (NY close of 108.89, +0.21%). While conditions remain overbought, upward momentum appears to be strong enough to lead to a move above 109.00. That said, the next resistance at 109.35 is still unlikely to come into the picture. Support is at 108.60 followed by 108.40.”

Next 1- weeks: “We have expected USD to trade sideways within 107.00/108.00 for about a week (27 May, spot at 107.55). We indicated that only a daily closing out of the expected range would suggest the start of a more sustained movement in USD. However, we did not anticipate the sudden strong pick-up in momentum as USD blast above 108.000 and posted the largest 1-day advance since mid-March (108.66, +1.00%). The outlook for USD is positive and from here and USD could continue to advance towards the early April high near 109.35. On the downside, the ‘strong support’ level at 107.80 is likely strong enough to hold any pull-back, at least for the next few days.”