FX Strategists at UOB Group noted USD/JPY could see some rebound amidst shrinking downside pressure.
24-hour view: “In yesterday’s update, we noted that although the undertone of USD is negative, “a strong sustained down move (below 105.00) is not expected.” USD printed a low of 105.05 before rebounding sharply towards 107.00. With the abrupt turnabout, momentum has started to rebuild on the upside. For today, USD is likely to be supported first at 106.10 then 105.85. On the topside, resistance at 107.10 may come into focus today.
Next 1-3 weeks: “Our last narrative was from 13-Aug (spot at 105.35) that “a move below 105.0 would not come as a surprise”. Overnight, USD printed a low of 105.05 before rebounding sharply towards 107.00. The abrupt and sharp move has effectively eased all the downside pressures and upside momentum is gradually building. That said, stiff resistance is still expected at 107.00, having held back buyers for a second time on 13-Aug (last was 6-Aug). The next level above that is 107.50 and only further gains to 108.00 would warrant a ‘positive phase’. On the downside, supports are expected at 105.10 and 104.60”.