USD/JPY is still seen neutral and navigating within a consolidative theme in the near term, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “The sudden lurch lower in USD during NY hours was clearly unexpected as it plunged to a low of 110.51 (before extending its decline after NY close). The immediate risk is still clearly on the downside even though the sharp decline appears to be running ahead of itself. That said, a test 110.05 would not be surprising but a break of last month’s low near 109.75 seems unlikely. On the upside, we expect 111.10 to be strong enough to cap any intraday strength (minor resistance is at 110.80)”.
Next 1-3 weeks: “We indicated on Wednesday (05 Sep, spot at 111.45) that “USD could advance further but August’s 112.14 peak is likely out of reach”. USD subsequently touched a high of 111.75 before plunging suddenly during overnight trade and hit a low of 110.51. The choppy price actions over the past several days have resulted in an unclear outlook and we prefer to continue to hold a neutral stance for now. Looking ahead, USD could continue to trade in a whippy manner and only a break out of last month’s 109.76/112.14 range would suggest that USD is ready for a directional move”.
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