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UOB Group’s FX Strategists noted the selling pressure in USD/JPY is expected to meet solid contention in the 109.00 zone.

Key Quotes

24-hour view: “USD soared to 109.95 last Friday before easing off to close on a firm note at 109.65. The underlying tone is firm and there is room for USD to retest the 109.95 level. For today, a sustained advance above this level is unlikely (next resistance is at 110.15). Support is at 109.45 followed by 109.30.”

Next 1-3 weeks: “Last Tuesday (06 Apr, spot at 110.30), we called for a ‘short-term top in USD’ and we were of the view that ‘corrective pullback has scope to move lower to 109.55’. After USD breached 109.55, we indicated on Wednesday (07 Apr, spot at 109.75) that ‘in view of the vastly improved downward momentum, the current pullback in USD could extend to 109.05’. Our expectations were not wrong as USD subsequently dropped to 108.98 before rebounding. The sharp bounce from the low has dented the downward momentum and the chance for a sustained decline below 109.00 is not high (next support is at 108.40). That said, only a break of 110.35 (‘strong resistance’ level previously at 110.55) would indicate that that the downside risk has dissipated.”