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FX Strategists at UOB Group now see the likeliness that USD/JPY could lose further momentum and recede to the 105.30 region.

Key Quotes

24-hour view: “Our expectation for USD to trade sideways yesterday was wrong as it plummeted to an overnight low of 105.93 before closing at 105.99 (-0.56%). USD extended its decline upon opening this morning and further USD weakness would not be surprising. That said, the solid support at 105.30 is likely out of reach (105.50 is already quite a strong level). On the upside, 106.30 is expected to be strong enough to cap any recovery (minor resistance is at 106.10).”

Next 1-3 weeks: “The positive in USD that started last Wednesday (12 Aug, spot at 106.50) ended abruptly as USD plunged below the ‘strong support’ level of 106.20 yesterday (17 Aug). From here, USD is expected to trade with a downward bias towards 105.00. Looking forward, USD has to move clearly below 105.30 in order to indicate it is ready to move towards 104.50, possibly revisiting the July’s low at 104.16. Overall, USD is expected to stay under pressure from here unless it can move above 106.65 (‘strong resistance’ level).”