USD/JPY seen navigating within the 105.00/107.00 range – UOB

USD/JPY’s outlook remains unclear so far and is predicted to keep trading in the 105.00-107.00 range in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “USD traded between 105.62 and 106.19 yesterday, much narrower than our expected sideway-trading range of 105.50/106.50. The underlying tone has weakened somewhat and USD is likely to drift lower towards 105.35 from here. The next support at 105.00 is unlikely to come into the picture. On the upside, only a move above 106.15 would indicate the current mild downward bias has eased (minor resistance is at 105.95).”

Next 1-3 weeks: “We have expected USD to weaken since 22 Jul (spot at 106.85) and in our latest update from last Tuesday (28 Jul, spot at 105.35), we highlighted that ‘a break of 105.00 would not be surprising’ but were of the view ‘104.40 is unlikely to come into the picture so soon’. However, USD cracked 104.40 on Friday and plummeted to 104.17 before lifting off and blast past several resistance levels with ease (high of 106.05). Such price action is not common as can be seen by the wide daily range of 188 pips, its biggest 1-day range since the “mayhem” in March. While the negative phase has clearly ended, the outlook for USD is unclear. From here, USD could trade in a choppy manner and within a broad 105.00/107.00 range.”