USD/JPY is expected to keep navigating between 105.00 and 107.00 in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “Our expectation for the ‘strong surge to extend higher to 106.55’ did not materialize as USD traded between 105.73 and 106.21 before settling at on a soft note at 105.79 (-0.29%). While USD could drift lower from here, momentum indicators are lackluster and any weakness is viewed as part of a 105.40/106.05 range (a sustained decline below 105.40 is not expected).”
Next 1-3 weeks: “We indicated earlier yesterday (19 Aug, spot at 105.30) that ‘downward momentum has improved further’ and ‘the next level to focus on is at 104.50’. While USD subsequently weakened further to a low of 105.09, it turned around and surged to a high of 106.14 during NY hours. While our ‘strong resistance’ level at 106.30 is still intact, the rapid loss in momentum suggests that further USD weakness is unlikely. From here, we view the movement in USD as part of a consolidation phase and USD could trade between the two major levels of 105.00 and 107.00 for a period of time.”
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