USD/JPY: Oversold conditions indicate that any decline is unlikely to reach 142.80 – UOB Group

Sharp drop in US Dollar (USD) could extend against Japanese Yen (JPY); oversold conditions indicate that any decline is unlikely to reach 142.80. In the longer run, the outlook for USD is unclear after wild swings; for the time being it could trade between 142.10 and 146.30, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Outlook for USD is unclear after wild swings

24-HOUR VIEW: "Two days ago, we expected USD to strengthen. Yesterday, after USD surged in the early Asian session, we indicated that 'We continue to expect USD to strengthen, but this time around, the significant resistance at 147.50 is unlikely to come under threat.' We pointed out that 'There is another resistance at 146.80.' USD rose less than expected to 146.28, and then in a surprise move, plunged to 143.94. The sharp drop could extend, but oversold conditions indicate that any decline is unlikely to reach 142.80. Resistance is at 144.60, followed by 145.20."

1-3 WEEKS VIEW: "USD surged in the early Asian trade yesterday. When it was at 145.75, we stated that 'even though the price action suggests further upside, it is too early to tell whether 147.50 is within reach.' We added, 'To sustain the momentum, USD must remain above the ‘strong support’ level, now at 144.50.' USD subsequently rose to 146.28 before reversing sharply, breaking below our ‘strong support’ level to reach 143.94. After the wild swings over the past few days, the outlook for USD is unclear. For the time being, USD could trade within this week’s wide range, between 142.10 and 146.30."