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UOB Group’s FX Strategists noted the probability of extra declines in USD/JPY could be running out of steam.

Key Quotes

24-hour view: “Our expectation for USD to ‘test the 103.70 support’ was incorrect as it rebounded strongly after touching 103.81. The relatively choppy price actions have resulted in a mixed outlook. USD could continue to trade in a choppy manner, albeit likely within a higher range of 104.00/104.50.”

Next 1-3 weeks: “We highlighted yesterday that ‘downward momentum is beginning to improve but USD has to close below 103.50 in order to indicate that it is ready to tackle the month-to-date low at 103.18’. We added, ‘the odds for such a move appear to be quite high as long as USD does not move above 104.50 within these 1 to 2 days’. USD dropped to a low of 103.81 before staging a surprisingly sharp rebound (overnight high of 104.40). There is no change in our view for now but unless USD can stay below 104.00 within these 1 to 2 days, the odds for further weakness would diminish quickly.”