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Despite a breakout of the 110.00 mark is expected, USD/JPY should likely trade within a consolidative mood in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD is likely to ‘test 109.70 first before easing off’. The subsequent advance exceeded our expectation as USD soared to a high of 109.84 before ending the day on a firm note at 109.80. Upward momentum has improved considerably and from here, there is scope for USD to move above 110.00. For today, last month’s peak near 110.30 is unlikely to come into the picture. Support is at 109.60 but only a breach of 109.40 would indicate the current upward pressure has eased.”

Next 103 weeks: “Despite the relatively sharp USD decline to 108.30 last Friday, we indicated on Monday (03 Feb, spot at 108.45) that ‘downward momentum has not improved by as much’ and added, the “the prospect for a move to last month’s low near 107.65 is not high”. That said, the manner by which USD rocketed to a high of 109.54 yesterday came as a surprise (the +0.77% gain is the largest 1-day rise in 6 months). Downward pressure has dissipated but the near-term outlook is unclear. From here, USD is expected to trade sideways for a period, likely between the two major levels of 108.30 and 110.30.”