USD/JPY: A move below 106.30 looks unlikely for now

Pablo Piovano FXStreet

Despite extra weakness remains on the cards, it is unlikely that USD/JPY could drop to sub-106.30 levels, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected USD to ‘weaken further’ last Friday, we did not anticipate the manner by which it plunged to 107.49 (the subsequently loss of -1.38% is the largest 1-day decline in 33 months). USD extended its decline upon opening this morning and the risk is still on the downside. Only a move above 108.70 would indicate the current weakness has stabilized. Until then, USD could continue to weaken but a sustained decline below 107.00 is unlikely for today.”

Next 1-3 weeks: “We expected ‘further USD weakness’ last Friday (28 Feb, spot at 109.50) but clearly did not anticipate the outsized plunge that led to a low of 107.49. Such large 1-day decline (the -1.38% drop last Friday is the largest in 33 months) is rare and while further weakness is not ruled out, the odds for a sustained drop below 106.30 are not high. Meanwhile, USD could continue to trade in a choppy manner over the next few days and only a move back above 110.00 (‘strong resistance’ level was at 110.45 last Friday) would indicate the current weakness has stabilized.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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