According to FX Strategists at UOB Group, USD/JPY could drop further and test the 105.20 region in the next weeks.
Key Quotes
24-hour view: “After trading in a quiet manner for several days, the sudden lurch lower in USD came as a surprise (overnight low of 105.53). The rapid drop appears to be running ahead of itself but with no sign of stabilization just yet, USD could breach the major support at 105.50. That said, it is left to be seen if it can maintain a foothold below this level (next support is at 105.20). Resistance is at 105.90 followed by 106.05.”
Next 1-3 weeks: “We have held the same view since last Monday (07 Sep, spot at 106.25) wherein USD ‘is likely in a consolidation phase and is expected to trade between 105.50 and 106.90 for a period of time’. After a week, USD is approaching the bottom of the range as it dropped to 105.53 yesterday (14 Sep). Downward momentum has improved considerably and from here, USD is expected to trade with a downward bias towards the next major support at 105.10. Overall, the negative bias in USD is deemed as intact as long as it does not move above the ‘strong resistance’ level at 106.30.”
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