In light of the recent price action, strong support in USD/JPY has emerged in the 104.40 region, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “USD traded between 105.58 and 106.16, narrower than our expected 105.50/106.50 range. Momentum indicators are still ‘flat’ and USD is expected to continue to trade sideways, likely between 105.40 and 106.10”.
Next 1-3 weeks: “After USD opened sharply lower and plunged yesterday, we indicated that “further decline is not ruled”. However, we added, “it is left to be seen if USD has enough momentum to challenge 104.00”. That said, the fleeting nature of the decline came as a surprise as USD rebounded strongly from 104.44 and easily exceeded our strong resistance at 106.20 (overnight high of 106.39). The breach of the strong resistance indicates that our view was proven incorrect within a day. The price action has resulted in a mixed outlook and USD could trade sideways within a broad 105.00/107.00 range for now (the 104.44 low is acting as a solid support and is unlikely to come into the picture for a while)”.
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