USD/JPY: Likely to trade in a higher range of 143.30/144.30 – UOB Group

Any further rebound is likely part of a higher range of 143.30/144.30 instead of a sustained advance. In the longer run, price action suggests that USD is still trading in a range, most likely between 142.10 and 145.50, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Price action suggests that USD is still trading in a range

24-HOUR VIEW: "USD dropped sharply to 142.52 two days ago. Yesterday, when USD was at 142.75, we pointed out that 'the sharp and swift selloff appears to be overextended.' However, we indicated that USD 'could decline further, but given the deeply oversold momentum, a clear break below 142.10 appears unlikely.' Our view turned out to be incorrect, as after dropping to 142.36, USD rebounded strongly to close 0.92% higher at 144.00. This time around, the sharp rebound appears to be excessive, and any further rebound is likely part of a higher range of 143.30/144.30 instead of a sustained advance."

1-3 WEEKS VIEW: "Last Friday (30 May, spot at 143.95), we indicated that “the outlook for USD is unclear, and it could trade within last week’s wide range, between 142.10 and 146.30.” USD subsequently plummeted, and yesterday (03 Jun, spot at 142.75), we highlighted the following: 'The increase in downward momentum is not enough to indicate a sustained decline. USD must break and hold below 142.10 before further declines can be expected. The likelihood of USD breaking clearly below 142.10 will remain intact as long as 143.85 is not breached in the next few days.' USD then rebounded strongly, breaking above our ‘strong resistance’ level at 143.85 (high of 144.10). The price action suggests that USD is still trading in a range, most likely between 142.10 and 145.50."