USD/JPY: USD may continue to decline – UOB Group
|The US Dollar (USD) is expected to trade in a range, probably between 149.00 and 150.50. In the longer run, USD may continue to decline, but it’s unclear if there’s enough momentum for it to reach 148.65, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
USD/JPY doesn’t seem to have momentum to reach 148.65
24-HOUR VIEW: “Following USD sharp drop to 149.46 last Friday, we indicated yesterday that ‘the decline seems to be overdone, and further weakening of USD is unlikely.’ We were of the view that USD ‘is more likely to trade in a 149.40/150.70 range.’ USD subsequently rose to 150.74 before plummeting to a low of 149.06 in NY session. Despite the sharp decline, downward momentum has not increased much. Today, we continue to expect USD to trade in a range, probably between 149.00 and 150.50.”
1-3 WEEKS VIEW: “Last Thursday (28 Nov, spot at 151.40), we highlighted that ‘there has been a surge in downward momentum.’ We also highlighted that ‘given the deeply oversold short-term conditions, the next support at 149.40 may not come into view so soon.’ After USD dropped to 149.46 on Friday, we indicated yesterday (02 Dec, spot at 150.00) that ‘To continue to decline, USD must break and stay below 149.40.’ While USD dropped to a low of 149.06 in NY session, it recovered to close above 149.40 at 149.59. From here, USD may continue to decline, but given that downward momentum has not increased much further, it is unclear if there is enough momentum for it to reach 148.65. All in all, only a breach of 151.30 (‘strong resistance’ level previously at 151.80) would indicate that the weakness in USD has stabilised.”
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