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Further consolidation is the most likely scenario for USD/JPY in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we held the view yesterday that “a break of 107.00 would come as a surprise”, the rapid retreat in USD from a high of 106.68 was not exactly expected (USD dropped to a low of 106.16). Despite the relatively rapid decline, downward momentum has not improved by much. That said, there is scope for USD to test 106.00 first (next support at 105.80) before the current mild downward pressure should eased. Resistance is at 106.45 followed by yesterday’s high near 106.70. The solid 107.00 level is likely to remain unchallenged for now”.

Next 1-3 weeks: “USD touched 105.03 earlier last week (12 Aug) before staging an outsized and rapid rebound that hit 106.97. While downward pressure has eased and the 105.03 low could be a short-term bottom, it is too early to expect a sustained recovery. Mixed indicators suggest USD could trade sideways for period and only a clear break out of the expected 105.50/107.30 sideway trading range would indicate that USD is ready for a sustained directional move”.