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USD/JPY has likely moved into a 103.00-104.40 consolidative phase, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for USD to ‘edge higher’ was wrong as it plummeted to an overnight low of 103.70 before extending its decline earlier this morning. While the sharp drop is likely to extend lower, oversold conditions suggest that any weakness could be limited to a test of 103.25. The next support at 103.00 is unlikely to come into the picture. Resistance is at 104.00 followed by 104.20.”

Next 1-3 weeks: “After rising strongly for four days in a row, the sudden and sharp drop in USD yesterday (12 Jan) came as a surprise. While our ‘strong support’ level at 103.50 is still intact, the rapid loss in momentum indicates that the positive phase that started last week has ended sooner than expected (we were expecting a break of 104.60). The strong but short-lived advance and the subsequent sharp drop has resulted in a mixed outlook. From here, USD could trade between 103.00 and 104.40.”