In opinion of FX Strategists at UOB Group, a top should be in place and USD/JPY should now move into a consolidative phase.
Key Quotes
24-hour view: “Yesterday, we held the view “USD could weaken further to 107.30″. Our expectation was correct as USD dipped to 107.30 before recovering quickly. Downward pressure has waned and the recovery has scope to extend higher even though any advance is expected to face solid resistance at 107.95 (minor resistance is at 107.75). An unlikely break of the strong 107.30 level could lead to a quick drop to 107.10″.
Next 1-3 weeks: “We highlighted yesterday (23 Sep, spot at 107.65) that the “risk of a short-term top has increased”. The subsequent break of 107.50 indicates that last Wednesday (18 Sep) high of 108.47 is the extent of the recovery phase that started more than 2 weeks ago (06 Sep, spot at 107.00). For the next couple of weeks, USD is expected to trade sideways to slightly lower, likely between 107.10 and 108.20″.
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