Further decline in USD/JPY could see the 105.00 area revisited in the next weeks, in opinion of FX Strategists at UOB Group.
Key Quotes
24-hour view: “Last Friday, we expected USD to weaken and indicated that ‘barring a move back above 107.00, USD is expected to weaken further even though the support at 106.25 could be just out of reach’. While our view was not wrong, we did not quite anticipate the rapid improvement in downward momentum as USD plunged to a low of 105.66 before closing lower by -0.68% (106.12). From here, USD is expected to stay under pressure unless it moves back above 106.45 (minor resistance is at 106.25). On the downside, a break of 105.66 could lead to further loss towards 105.30 (next support is at 105.00).”
Next 1-3 weeks: “While we noted last Friday (24 Jul, spot at 106.65) that ‘downward momentum has improved quite a fair bit’ and that ‘the risk of a break of 106.25 has increased’, the manner by which USD plunged through 106.25 and the subsequent rapid drop to a low of 105.66 was not exactly expected. USD closed lower by -0.68% (106.12), its largest 1-day decline in 7 weeks. Downward momentum has increased further and from here and USD is expected to weaken further. The next level to focus on is at 105.00. On the upside, the ‘strong resistance’ level has moved lower to 106.80 from Friday’s level of 107.50. Only a break of this level would indicate that the current strong downward momentum has eased.”
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