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Further downside in USD/JPY is seen meeting solid contention in the 106.00 neighbourhood, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “After trading quietly for several days, USD was jolted wide awake yesterday as it traded in a volatile manner and within a broad range of 106.06/107.21 before settling at 106.51 (-0.34%). The choppy and rapid swings have resulted in a mixed outlook. For today, further volatile price action is not ruled out but USD is likely to stay within yesterday’s broad range of 106.06/107.21.”

Next 1-3 weeks: “We have held the same view for about 2 weeks wherein USD is under mild downward pressure and only a daily closing below 106.70 would indicate that it could weaken to 106.00. After trading in a muted manner for several days, USD woke up with a jolt as it dropped to 106.73 early yesterday, snapped back up to 107.21 before plunging overnight to a low of 106.06. The daily closing at 106.51 (-0.34%) is on the soft side and the risk from here is for USD to weaken. A break of the solid support at 106.00 is not ruled out but this level could remain intact for a few more days. Looking ahead, a break of this level would shift the focus to 105.50. On the upside, the ‘strong resistance’ level has moved lower to 107.20 from yesterday’s level of 107.40. On a shorter-term note, 106.95 is already quite a strong level.”