USD/JPY room for a test of 111.55/60 – UOB

In opinion of FX Strategists at UOB Group, USD/JPY could slip back towards the 111.60/55 band in the near term.

Key Quotes

“The anticipated USD weakness exceeded our expectation by easily moving below the 112.30 target to hit a low of 111.91. The decline is severely over-extended but in view of the sharp drop, any rebound from here is likely to be limited. Overall, USD is expected to consolidate its loss and trade sideways at these lower levels, probably between 111.90 and 112.60”.

“While we indicated that a test of 112.30 would not be surprising, the ease of which this strong support was taken out was unexpected (low of 111.91 on Friday). The pressure is still on the downside and there is room for the current weakness to extend lower towards the major 111.55/60 support (low seen earlier this month). Stabilization is only upon a move back above 113.00”.