USD/JPY has likely moved into a consolidative phase and is seen trading between 105.00 and 107.00 in the next weeks, noted FX Strategists at UOB Group.
Key Quotes
24-hour view: “We noted yesterday that the ‘decline in USD is oversold but with no sign of stabilization just yet, USD could test the 105.00 level’. USD did not quite get to ‘test’ 105.00 as it only touched 105.09. USD took off suddenly during NY hours as it surged to a high of 106.14 before ending the day on a strong note at 106.10 (+0.65%). The strong surge appears to have room to extend further but for today, any advance is unlikely to move above the strong resistance at 106.55 (106.30 is already quite a strong level). Support is at 105.75 followed by 105.45.”
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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