Japanese Yen: Set for further gains against US Dollar - UOB

FXStreet Insights Team FXStreet

United Overseas Bank strategists (UOB) Quek Ser Leang and Lee Sue Ann note a steep USD/JPY selloff as safe-haven demand for Japanese Yen (JPY) surged on geopolitical tensions and falling US Treasury yields. Short term, the oversold decline is seen extending toward 156.00, while the 1–3 week and 1–3 month views both flag a rapid increase in downward momentum, with support at 156.00 and 155.50 and further weakness likely, though 152.08 remains uncertain.

Yen strength as momentum turns sharply lower

"24-HOUR VIEW: We expected USD to “trade between 157.90 and 158.50” yesterday. We did not expect the steep decline that sent USD to a low of 156.67. USD closed at 156.76 (-0.87%), and it continued to decline in the early Asian session today. While deeply oversold, the decline could extend to 156.00 before stabilisation can be expected. The next support at 155.50 is likely out of reach for now. To sustain the downward momentum, USD must not break above 157.30, with minor resistance at 156.95."

"1-3 WEEKS VIEW: Last Wednesday (14 Oct, spot at 158.35), we highlighted that USD “has likely moved into a range-trading phase between 157.50 and 159.05.” Yesterday (22 Oct, spot at 158.20), we stated that “we continue to expect range-trading, but a narrower range of 157.70/158.80 is likely sufficient to hold the price movements for now.” In a sudden sharp move, USD plunged to a low of 156.67. The rapid increase in downward momentum suggests USD is likely to decline further. Support levels are 156.00 and 155.50. On the upside, a break above 157.80 would mean that USD is not declining further."

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