USD/JPY odds for a test of 112.00 and beyond – UOB

The pair has now accelerated its chances of reaching the key 112.00 handle and above in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for sideway trading was wrong as USD rose strongly to hit a high of 111.64 before ending the day on a solid note (NY close of 111.62). While the swift up-move appears to be running ahead of itself, there no sign of weakness just yet and a move above the late August high of 111.82 would not be surprising. However, a break of the next major resistance at 112.15 is not expected. On the downside, only a break of 111.15 would indicate that a short-term top is in place (minor support is at 111.35)”.

Next 1-3 weeks: “While the rapid pace and extent of the rebound from last week’s 110.37 low was surprising, we are not convinced that USD is ready for a directional move. However, short-term underlying tone has clearly improved and the immediate pressure is on the upside and the probability for a test of last month’s peak near 112.15 has increased. At this stage, we do not anticipate a sustained move above this level. On the downside, only a break of 110.85 would indicate that the current mild upward pressure has eased”.