USD/JPY stance shifted to neutral from bearish – UOB
|The pair’s perspective is now neutral from bearish and it is expected to meander between 110.80 and 113.00 in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
“While we indicated yesterday that the sharp recovery in USD “has scope to extend higher to 111.50”, the ease of which this strong level was taken out was unexpected. With no signs of weakness just yet, further gain is not ruled out but a clear break above 112.45 seems unlikely (next resistance at 112.70). The previous 111.50 resistance is acting as a strong support now but only a move back below 111.30 would indicate that the current strong upward pressure has eased”.
“When we shifted to a bearish stance on Monday (24 July), we were aware of the oversold conditions and highlighted that the downside potential could be limited to 110.20. However, the strong surge higher yesterday was clearly unexpected and the stop-loss for our bearish view at 112.00 was just breached at the time of writing (resulting in a 50 pips loss). A short-term low is likely in place and USD is deemed to have moved into a neutral 110.80/113.00 consolidation range”.
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