USD/JPY: A drop to 108.90 stays on the cards – UOB

USD/JPY risks a potential decline to the 108.90 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is scope for USD to move higher but any advance is not expected to break the major resistance at 109.85’. While our view was not wrong as USD rose to 109.79, we did not anticipate the sharp decline from the high (low has been 109.29). Despite the rapid drop, downward momentum has not improved by much and USD is unlikely to weaken much further. For today, USD is more likely to trade between 109.20 and 109.60.”

Next 1-3 weeks: “There is not much to add to our update from Wednesday (10 Jun, spot at 109.40). As highlighted, USD is under mild downward pressure and could drift lower to 108.90. On the upside, a break of 109.85 would indicate that the current mild downward pressure has eased.”