USD/JPY: Outlook predicted to remain fragile – UOB
|USD/JPY risks further downside and a probable test of the 105.00 region in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We highlighted yesterday that USD ‘could breach the major support at 105.50 but it is left to be seen if it can maintain a foothold below this level’. We added, ‘the next support is at 105.20’. The subsequent weakness was accompanied by a more robust momentum than expected as USD dropped to 105.28 before settling at 105.43 (-0.27%). While oversold, the current weakness has room to extend further and a break of 105.20 would not be surprising. That said, the next support at 105.00 is likely out of reach. Resistance is at 105.60 followed by 105.75.”
Next 1-3 weeks: “Yesterday (15 Sep, spot at 105.70), we indicated that ‘downward momentum has improved considerably and from here, USD is expected to trade with a downward bias towards the next major support at 105.20’. The pace of the decline was more rapid than expected as USD dropped to an overnight low of 105.28. Downward momentum continues to improve and from here, a break of 105.20 would shift the focus to the major support at 105.00. Looking forward, USD has to close below this solid support before further weakness can be expected. All in, USD is expected to remain weak unless it can move above 106.00 (‘strong resistance’ level was at 106.30 yesterday).”
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