USD/JPY remains on the defensive – UOB

FX Strategists at UOB Group keep the negative view on USD/JPY and the focus of attention on 104.00 for the time being.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the underlying tone still appears to be soft and we see chance for USD to drift lower’. However, we were of the view that ‘a sustained decline below 104.50 is unlikely’. The subsequent weakness in USD exceeded our expectation as it dropped to a low of 104.37 before closing on a soft note at 104.40 (-0.40%). Downward momentum has improved and further USD weakness is likely even though the major support at 104.00 could be out of reach for now (minor support is at 104.20). Resistance is at 107.70 followed by 104.90.”

Next 1-3 weeks: “We continue to hold the same view from last Thursday (22 Oct, spot at 104.65) wherein USD ‘is expected to stay on the defensive but it is left to be seen if it can crack the September’s low near 104.00’. While shorter-term downward momentum has improved, the 104.00 is a solid support and may not be easy to crack. On the upside, a break of 105.20 (‘strong resistance’ level previously at 105.40) would indicate the downside risk has dissipated.”