USD/JPY still seen within 103.75-105.20 – UOB

FX Strategists at UOB Group expect USD/JPY to extend the consolidative theme between 103.75 and 105.20 in the next weeks.

Key Quotes

24-hour view: “Yesterday, we noted that ‘downward momentum is beginning to wane and the odds for further USD weakness are low’ and we expected USD to ‘consolidate and trade sideways within a 103.70/104.20 range’. Our expectation was not wrong as USD traded between 103.70 and 104.21. The underlying tone has weakened somewhat and we chance for USD to dip to 103.60 first before a more sustained rebound can be expected. For today, the next support at 103.18 is not expected to come into the picture. Resistance is at 104.20 but the stronger level is at 104.50.”

Next 1-3 weeks: “Two days ago (17 Nov, spot at 104.45), we indicated that ‘there is a slight downward bias in USD but any weakness is viewed as part of a lower trading range of 103.75/105.20’. We added, USD ‘has to close below 103.75 in order to indicate that it is ready to move towards last week’s low at 103.18’. USD dropped to a low of 103.63 yesterday before rebounding. While the underlying tone still appears soft, the prospect for USD to move to 103.18 from here is not high. That said, only a break of 104.50 would indicate the current mild downward pressure has eased.”