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FX Strategists at UOB Group noted the outlook on USD/JPY stays unclear for the time being.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is scope for the sharp bounce to extend higher but any advance is viewed as part of a broad 105.30/106.70 range’. However, USD traded within a narrower range than expected (between 105.56 and 106.46). The price action offers no fresh clues and USD could trade sideways for today, expected to be between 105.50 and 106.50.”

Next 1-3 weeks: “We have expected USD to weaken since 22 Jul (spot at 106.85) and in our latest update from last Tuesday (28 Jul, spot at 105.35), we highlighted that ‘a break of 105.00 would not be surprising’ but were of the view ‘104.40 is unlikely to come into the picture so soon’. However, USD cracked 104.40 on Friday and plummeted to 104.17 before lifting off and blast past several resistance levels with ease (high of 106.05). Such price action is not common as can be seen by the wide daily range of 188 pips, its biggest 1-day range since the ‘mayhem’ in March. While the negative phase has clearly ended, the outlook for USD is unclear. From here, USD could trade in a choppy manner and within a broad 105.00/107.00 range.”