A drop to the 104.70 region in USD/JPY should not be ruled out in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “Last Friday, we held the view that USD ‘could edge higher but chance for a break of the solid resistance at 107.00 is not high’. While our view was not wrong as the advance in USD stopped at 106.94, the sudden and sharp sell-off that resulted in huge drop of -1.14% (NY close of 105.34) was clearly unexpected. The rapid decline appears to be running ahead of itself and while USD could weaken from here, any weakness is viewed as a lower trading range of 105.00/105.85. In other words, a sustained decline below 105.00 is not expected.”
Next 1-3 weeks: “We noted last Friday (28 Aug, spot at 106.60) that ‘momentum outlook still appears positive but USD has to close above 107.00 before further sustained advance can be expected’. USD subsequently rose to 106.94 before suddenly plunging to a low of 105.18 (closed at 105.34, -1.14%). The risk has shifted quickly to the downside and from here; USD could and test the solid support at 104.70. At this stage, the chance for a sustained decline below this level is not high (105.00 is already quite a strong level). On the upside, the ‘strong resistance’ at 106.30 is likely strong enough to hold, at least for these few days.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD now refocuses on the 200-day SMA
EUR/USD extended its positive momentum and rose above the 1.0700 yardstick, driven by the intense PMI-led retracement in the US Dollar as well as a prevailing risk-friendly environment in the FX universe.
Gold price on the defensive, amid soft US Dollar
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum continues hinting at rally following reduced long liquidations
Ethereum has continued showing signs of a potential rally on Tuesday as most coins in the crypto market are also posting gains. This comes amid speculation of a potential decline following FTX ETH sales and normalizing ETH risk reversals.
Australia CPI Preview: Inflation set to remain above target as hopes of early interest-rate cuts fade
An Australian inflation update takes the spotlight this week ahead of critical United States macroeconomic data. The Australian Bureau of Statistics will release two different inflation gauges on Wednesday.