FX Strategists at UOB Group now believe USD/JPY could slip back to the 106.00 neighbourhood in the short-term horizon.
Key Quotes
24-hour view: “We highlighted yesterday that ‘barring a move above 107.05, USD is expected to weaken to 106.25’. While USD declined as expected, it recovered quickly after touching 106.34. Downward momentum has eased and USD has likely moved into a consolidation phase. From here, USD could edge slightly higher but is expected to stay within a 106.30/107.05 range.”
Next 1-3 weeks: “While we noted yesterday (28 Apr, spot at 107.30) that ‘downward momentum is beginning to pick-up’, we held the view that ‘it is too early to expect a sustained decline in USD’. We highlighted that ‘only a NY closing below 106.70 would indicate that USD is ready to move to 106.00’. USD subsequently dropped to 106.54 before ending the day at 106.86. While the NY closing is not as weak as preferred, the price action suggests USD is likely to weaken to 106.00. Only a breach of the ‘strong resistance’ at 107.35 would indicate that our view is wrong.”
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