A probable visit to the 106.30 region in USD/JPY appears to be running out of steam as of late, suggested FX Strategists at UOB Group.
24-hour view: “The sudden overnight surge in USD that touched 107.45 was not expected. While the rapid rise appears to be running ahead of itself, there is room for USD to test the strong 107.50 resistance. For today, the prospect for a clear break of this level is not high (next resistance is at 107.75). Support is at 107.00 but only a move below 106.70 would indicate the current upward pressure has eased”.
Next 1-3 weeks: “The sudden surge in USD yesterday (NY close of 107.28, +0.32%) came as a surprise. While our 107.50 ‘key resistance’ is still intact (overnight high of 107.45), downward pressure has been dented and the odds for further USD weakness to 106.35 have diminished (we have expected USD to trade with a downside bias towards 106.35 since last Thursday, 03 Oct, spot at 107.15). In order to rejuvenate the flagging downward momentum, USD has to move and stay below 106.70 within these 1 to 2 days or a break of 107.50 would suggest that USD has moved into a sideway-trading phase”.