Following the recent steep rise, the USD / JPY faces next resistance at 112.20 in the coming weeks, note the currency strategists at UOB Group.
24 hour view: “While our view yesterday of USD / JPY moving higher was correct, we underestimated the strength of USD / JPY as it rose to 111.63 (we expected a limited test of 111.20). Conditions remain deeply overbought, but there is room for USD / JPY to test main resistance at 111.80 before relaxing (next resistance is at 112.20). Support is at 111.40. A breakout of 111.15 would indicate that current upward pressure has eased. “
Next 1-3 weeks: “We turned positive in USD / JPY last Friday (September 24, USD / JPY at 110.30) but we were not expecting the rapid pace of the subsequent advance. In our update yesterday (September 28, USD / JPY at 110.95), We indicate that USD / JPY ‘could break above 111.20, but it remains to be seen if it can extend its gains to the August high near 111.80.’ Subsequently, USD / JPY spiked to 111.63 before closing on a firm tone at 111.50 (+ 0.45%). Major resistance at 111.80 appears to be close at hand. Next resistance above 111.80 is at 112.20. Overall, only a breakout of 110.70 (‘strong support’ was at 110.30 yesterday) would indicate that the fast rally of the last few days is ready to take a break. “