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FX Strategists at UOB Group noted further pullbacks in USD/JPY is expected to meet solid contention in the 103.00 neighbourhood in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘could dip below the strong support at 103.40’. We added, ‘oversold conditions suggest 103.00 is unlikely to come into the picture’. Our view was not wrong as USD dipped to 103.31 before recovering to close little changed at 103.48 (- 0.04%). While downward pressure has eased, it is too soon to expect a sustained rebound. That said, there is room for USD to edge higher but any advance is viewed as part of a 103.35/103.75 range (a clear break of 103.75 is unlikely).”

Next 1-3 weeks: “Yesterday (20 Jan, spot at 103.90), we highlighted that USD ‘could continue to trade sideways, likely within a 103.40/104.40 range’. USD is currently approaching the bottom of the range at 103.40 and shorter-term momentum is beginning to improve. The bias is tilted to the downside but any weakness is likely limited to a test of the major support at 103.00. On the upside, a break of 104.20 would indicate the current mild downward pressure has eased.”