USD/JPY remains side-lined for the time being, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
24-hour view: “Yesterday, we highlighted that ‘upward momentum has slowed and USD is unlikely to advance further’ and we expected USD to ‘trade between 133.10 and 134.50’. USD subsequently rose to 134.42 before staging a surprisingly sharp pullback (low of 132.75). Despite the sharp pullback, downward momentum has not improved by much. That said, there is room for USD to dip to 132.30. The next support at 131.80 is not expected to come under threat. On the upside, a breach of 134.10 (minor resistance is at 133.65) would indicate that the current mild downward pressure has eased.”
Next 1-3 weeks: “There is no change in our view from Wednesday (03 Aug, spot at 133.50). As highlighted, the recent USD weakness has ended. The current price actions are likely the early stages of a broad consolidation phase and USD is expected to trade between 131.30 and 135.60 for now.”
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