USD/JPY could enter in a brief consolidation period ahead of a potential move to 134.40 in short term, suggest UOB Group’s Economist Lee Sue Ann and Market Strategist Quek Ser Leang.

24-hour view: “We expected USD to strengthen yesterday but we were of the view that ‘any advance is unlikely to break the major resistance at 133.30’. The anticipated advance exceeded our expectations as USD lifted off and soared to a high of 133.87. The rapid rise is deep in overbought territory and USD is unlikely to advance much further. Today, USD is more likely to consolidate and trade between 132.60 and 133.90.”

Next 1-3 weeks: “Yesterday (10 Apr, spot at 132.50), we noted that ‘upward momentum is building’ and we expected USD to trade with an upward bias towards 133.35. While our view of a stronger USD was correct, we did not anticipate the manner in which it surged above 133.35 (high has been 133.87). Further USD strength is not ruled out but overbought short-term conditions could lead to a couple of days of consolidation first. Overall, as long as 132.00 (‘strong support’ level was at 131.10 yesterday) is not breached, USD could rise to 134.40 later on.”