FX Strategists at UOB Group noted that USD/JPY is expected to re-test the 106.20 region on a daily close below 106.90.
Key Quotes
24-hour view: “The sudden and sharp overnight plunge in USD came as a surprise. While the rapid drop appears to running ahead of itself, there is no sign of stabilization just yet and it is too soon to expect a recovery. USD is more likely to consolidate its loss and trade sideways, expected to be within a 106.90/107.45 range”.
Next 1-3 weeks: “While we highlighted yesterday (24 Sep, spot at 107.55) that a “short-term top is in place”, we expected USD to trade sideways to “slightly lower”. USD subsequently dropped sharply during NY hours and moved below our expected 107.10/108.20 range (low of 106.95). Despite the sharp decline, USD does not appear to be ready for sustained down-move. Only a NY close below 106.90 would suggest that USD is ready to challenge the major 106.20 support. For now, the prospect for such a move is not high but it would continue to increase unless USD can move and stay above 107.75 within these few days”.
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