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According to FX Strategists at UOB Group, USD/JPY could extend the downside to the 108.40 region in the next weeks.

Key Quotes

24-hour view: “USD gapped lower upon opening yesterday and plummeted to a low of 108.72 before ending the day at 108.89 (-0.35%). Severely oversold conditions suggest further sustained weakness is unlikely. USD is more likely to consolidate and trade sideways, expected to be between 108.70 and 109.25.”

Next 1-3 weeks: “While we indicated last Thursday (23 Jan, spot at 109.55) that the risk for USD ‘has shifted to the downside’, the manner by which it cracked 109.00 came as a surprise (USD gapped lower upon opening yesterday and dropped to 108.72). The price action suggests USD could weaken further to 108.40. At this stage, the prospect for further weakness to 108.00 is not high. Only a move above 109.50 would indicate the current weakness has stabilized.”