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UOB Group’s FX Strategists noted USD/JPY risks a potential drop to the 108.40 zone and probably below in the next weeks.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘downward momentum has clearly waned but there is still room for USD to edge lower’. We added, ‘the major support at 108.40 is likely out of reach’. Our view was not wrong as USD edged down to 108.60. Downward momentum has waned further and USD is unlikely to weaken. For today, USD is more likely to trade sideways between 108.60 and 109.15.”

Next 1-3 weeks: “There is not much to add to our latest narrative from two days ago (14 Apr, spot at 108.85). As highlighted, the pullback in USD that started earlier last week could extend to 108.40. Extension to 108.00 is not ruled out but the odds are lower. On the upside, a break of 109.40 (‘strong resistance’ level previously at 109.60) would indicate that the current downward pressure has eased.”

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