USD/JPY looks offered, now targets 108.05 – UOB
|USD/JPY is expected to extend the correction lower to the 108.00 area in the next weeks, in opinion of FX Strategists at UOB Group.
Key Quotes
24-hour view: “We expected USD to ‘edge lower within a 108.75/109.25 range’ yesterday. Instead of edging lower, USD plummeted for the second day and briefly cracked the 108.50 support (low of 108.47). While strong downward momentum suggests further USD weakness is likely, severely oversold conditions could ‘limit’ any decline to 108.30. On the upside, only a move above 109.00 would indicate the current weakness has stabilized (minor resistance is at 108.80).”
Next 1-3 weeks: “We detected the weakened underlying tone yesterday (03 Dec, spot at 109.00) and expected USD ‘to test the bottom sideway-trading range’ at 108.50 first. While the view was not wrong, the rapid pace of the subsequent decline came as a surprise as USD plummeted and moved a few pips below 108.50 during NY hours (low of 108.47). The price action has resulted in a rapid improvement in momentum and from here, USD is expected to trade with downward bias towards 108.05. On the upside, only a break of the 109.20 ‘strong resistance’ would indicate that our view is wrong”.
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