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According to FX Strategists at UOB Group, USD/JPY risks a potential move to 108.40 and below in the short-term horizon.

Key Quotes

24-hour view: “Our expectations for USD to ‘weaken further’ did not materialize as it traded in a surprisingly quiet manner between 108.74 and 109.09. Downward momentum has clearly waned but there is still room for USD to edge lower. That said, the major support at 108.40 is likely out of reach for today. Resistance is at 109.10 followed by 109.30.”

Next 1-3 weeks: “We have held a negative view in USD for more than a week now. In our latest narrative from Monday (12 Apr, spot at 109.65), we highlighted that ‘downside risk in USD is still intact but chance for a sustained decline below 109.00 is not high’. In other words, we did not quite anticipate the sudden sharp decline yesterday and the ease by which USD cracked 109.00 earlier. The vastly improved momentum indicates that the pullback that started earlier last week could extend to 108.40, with lower odds for extension to 108.00. Overall, USD is deemed to be under pressure as long as 109.60 is not breached (‘strong resistance’ level was at 110.35 yesterday).”