Strong US Dollar (USD) rally has scope to extend, potentially breaking above 160.00, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD/JPY may potentially break above 160.00

24-HOUR VIEW: "Yesterday, we expected USD to 'consolidate between 157.90 and 159.00'. USD then traded in a narrower range than expected (158.18/158.87), closing slightly higher by 0.13% at 158.64. The price movements still appear to be part of a consolidation phase. Expected range for today: 158.25/159.00."

1-3 WEEKS VIEW: "We turned positive on USD early this week. Two days ago (14 Jan, spot at 159.15), we indicated that 'despite the deeply overbought short-term conditions, the strong USD rally has scope to extend, potentially breaking above the roundnumber resistance of 160.00'. After USD rose to 159.45 and then pulled back, we highlighted the following yesterday: 'Conditions remain deeply overbought, and upward momentum is starting to slow with the pullback. However, only a breach of 157.70 (‘strong support’ level) would indicate that 160.00 is out of reach. Meanwhile, the overbought conditions suggest USD could consolidate for a couple of days'. We continue to hold the same view."