USD/JPY: Tough support aligns around 112.50 – UOB

According to FX Strategists at UOB Group, USD/JPY’s decline is expected to meet solid support in the mid-112.00s in the short-term horizon.

Key Quotes

24-hour view: “Our view for ‘the rebound in USD to extend’ was incorrect as it dropped to 112.65. Despite the decline, downward momentum has not improved by much. For today, USD could drift lower but a break of the major support at 112.50 is unlikely (minor support is at 112.65). Resistance is at 113.25 but only a break of 113.50 would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (01 Dec, spot at 113.40). We continue to hold the same view that USD could weaken further but 112.50 is expected to offer solid support.  On the upside, a breach of the ‘strong resistance’ level at 114.00 (level was at 114.30) would indicate that USD is not ready to move below 112.50. Looking ahead, a clear break of 112.50 would shift the focus to 112.00.”