USD/JPY: Pullback from the high can extend below 149.65 – UOB Group

Pullback from the high could extend below 149.65 before stabilisation can be expected. In the long run, US Dollar (USD) weakness appears to have stabilised; it is likely to trade in a range of 148.65/152.00 for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD weakness appears to have stabilised

24-HOUR VIEW: “USD plummeted to 148.63 on Tuesday, and then rebounded quickly. In early Asian trade yesterday, we indicated that ‘the brief drop did not result in any increase in momentum, and we continue to expect USD to trade in a range, probably between 148.80 and 150.30.’ Instead of trading in a range, USD soared to 151.22, pulling back to close at 150.60. The pullback from the high could extend below 149.65 before stabilisation can be expected. USD is unlikely to threaten the major support at 148.65. Resistance levels are at 150.80 and 151.20.”

1-3 WEEKS VIEW: “We have held a negative USD view for two weeks now. Yesterday (04 Dec, spot at 149.65), we highlighted that ‘for USD to continue to decline, it must break and close below 148.65, which is acting as a significant support level now.’ We added, ‘should USD break above 150.80 (‘strong resistance’ level), it would indicate that the weakness in USD has stabilised.’ USD subsequently soared to a high of 151.22, breaking above our ‘strong resistance’ level. The USD weakness appears to have stabilised. The current price movements are likely the early stages of a range trading phase, probably between 148.65 and 152.00.”