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USD/JPY is still expected to grind lower in the next weeks, according to UOB Group’s FX Strategists.

Key Quotes

24-hour view: “We expected USD to weaken yesterday but we were of the view that ‘102.85 is a solid support and this level is unlikely to yield so easily’. We highlighted that the ‘next support is at 102.60’. USD subsequently cracked 102.85 before rebounding strongly after touching a low of 102.69. The rebound has scope to edge above 103.30 but is unlikely to threaten the strong resistance at 103.65. Support is at 102.95 followed by 102.75.”

Next 1-3 weeks: “We highlighted yesterday that ‘the risk of a break of 102.86 has increased, any weakness is likely limited to 102.60’. USD subsequently took out 102.86 before rebounding strongly after touching a low of 102.69. While the risk is still for a lower USD, downward momentum is not strong and 102.60 may not break so soon. Looking forward, the next support below 102.60 is at 102.30. All in, USD is deemed to be under mild downward pressure as long as it does not move above 103.65 (no change in ‘strong resistance’ level).”