According to FX Strategists at UOB Group, further downside is not ruled out in USD/JPY in the short-term horizon.
24-hour view: “Expectation for USD to “trade sideways” last Friday was incorrect as USD nose-dived and extended its loss upon opening this morning. The rapid and sharp decline appears to be running too fast, too soon and while further USD weakness would not be surprising in the days ahead, for today, USD is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today; 104.40/105.40”.
Next 1-3 weeks: “After trading sideways for several days, the outsized plunge of -0.96% last Friday (105.39) and the weakness upon opening this morning came as a surprise (to put it mildly). The sharp drop early this morning appears to have dipped below the 2018 low of 104.55. While further decline is not ruled out, it is left to be seen if USD has enough momentum to challenge the next support at 104.00. All in, USD could trade in a volatile manner from here but unless it can move above 106.20, the immediate risk is clearly on the downside”.
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