USD/JPY risks a probable test of 108.75 – UOB
|A drop to the 108.75 level and even 108.50 looks likely if USD/JPY closes below 109.05 in the next weeks, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “The sharp drop in USD to 109.17 came as a surprise (we were expecting USD to trade within a 109.45/109.85 range). Further USD weakness would not be surprising but USD may not be able to maintain a foothold below the major support at 109.05. The next support at 108.75 is not expected to come into the picture. Resistance is at 109.45 but only a break of 109.60 would indicate that the current weakness has stabilized.”
Next 1-3 weeks: “We have expected USD to trade within a 109.20/110.60 range since last Wednesday (28 Jul, spot at 109.85). Yesterday (02 Aug), we highlighted that ‘shorter-term downward momentum has improved somewhat but USD has to close below 109.05 before a sustained decline can be expected’. USD subsequently dropped to 109.17 before closing on a soft note at 109.28 (-0.38%). Downward momentum has improved further and a daily closing below 109.05 would indicate that USD could head lower to 108.75, possibly 108.50. The downside risk is deemed intact as long as USD does not move above 109.80 within these few days.”
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