Strong momentum indicates further US Dollar (USD) strength; deeply overbought conditions suggest that 158.90 is likely out of reach today. In the longer run, USD is likely to continue to rise; the level to watch is 158.90, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD/JPY is likely to continue to rise

24-HOUR VIEW: "When USD was at 156.85 in the early Asian trade yesterday, we noted 'a tentative increase in upward momentum'. We expected USD to 'drift higher” but we pointed out that “any advance is likely part of a higher range of 156.55/157.20'. The subsequent price movements did not turn out as expected. USD lifted off, broke above 157.20 and surged to a high of 158.18. Strong momentum indicates further USD strength, but deeply overbought conditions suggest that 158.90 is likely out of reach today. Any pullback today is likely to remain above 157.40, with minor support at 157.75."

1-3 WEEKS VIEW: "In our most recent narrative from last Wednesday (06 Jan, spot at 156.70), we highlighted that USD 'is likely to trade in a range for now between 155.60 and 157.50'. Last Friday, in a sudden move, not only did USD break above 157.50, but it also soared to a high of 158.18. With rapidly increasing upward momentum, USD is likely to continue to rise. The level to watch is last year’s high, near 158.90. We will remain positive on USD as long as it holds above the ‘strong support’ level, currently at 157.00."