USD/JPY could still test 107.00 and below – UOB

FX Strategists at UOB Group noted USD/JPY remains under pressure and further decline should not be ruled out.

Key Quotes

24-hour view: “We highlighted yesterday that ‘a dip below 107.00 would not be surprising but any weakness in USD could be limited to a test of 106.60’. While USD did move below 107.00, it recovered after touching 106.89. Downward pressure has diminished and the recovery has room to extend to 108.10 (minor resistance is at 107.80). Support is at 106.90 followed by 106.60.”

Next 1-3 weeks: “We detected the short-term top in USD relatively early when we indicated last Thursday (26 Mar) when it was trading at a much higher level of 110.70 that ‘risk of a short-term top in USD has increased’. As USD subsequently dropped, we indicated that “a short-term top is in place; USD could weaken further to 107.00”. USD dropped to 107.10 on Monday (30 Mar) but since then, it appears to be a bit hesitant in extending its down move. For now, we continue to see chance for further weakness as the next support of note below 107.00 is not until 105.90. That said, in view of the lackluster momentum, this level may be out of reach this time round (there is a minor support at 106.60). All in, the current weakness in USD is deemed as intact until there is a breach of 109.40 (‘strong resistance’ level was previously at 109.80).”