USD/JPY: 143.85 must be breached for a sustained upside – UOB Group

US Dollar (USD) could decline further; given the deeply oversold momentum against Japanese Yen (JPY), a clear break below 142.10 appears unlikely. In the longer run, for a sustained decline, USD must first close below 142.10, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

USD must first close below 142.10 to decline further

24-HOUR VIEW: "Although we noted yesterday that 'downward momentum has increased slightly', we indicated that 'rather than a sustained decline, USD is more likely to trade in a lower range of 143.25/144.30.' The sudden downward acceleration that sent USD plunging to 142.52 was surprising. The sharp and swift selloff appears to be overextended. However, with no signs of stabilisation just yet, USD could decline further. Given the deeply oversold momentum, a clear break below 142.10 appears unlikely. On the upside, should USD break above 143.30 (minor resistance is at 143.00), it would be an indication that the weakness is stabilising."

1-3 WEEKS VIEW: "Last Friday (30 May, spot at 143.95), we indicated that 'after the wild swings, the outlook for USD is unclear.' We added, 'For the time being, USD could trade within last week’s wide range, between 142.10 and 146.30.' Yesterday, USD plunged to 142.52. The increase in downward momentum is not enough to indicate a sustained decline. USD must break and hold below 142.10 before further declines can be expected. The likelihood of USD breaking clearly below 142.10 will remain intact as long as 143.85 is not breached in the next few days."