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USD/JPY is seen grinding lower and testing the 108.00 region in the next weeks, according to FX Strategists at UOB Group.

Key Quotes

24-hour view: “Expectation for USD to “retest 108.25″ was incorrect as it rebounded to 108.85. The rapid rebound appears to be running ahead of itself and further USD strength is not expected. For today, USD is likely to trade sideways, expected to be within a 108.50/108.95 range”.

Next 1-3 weeks: “We cautioned on Wednesday (13 Nov, spot at 109.00) that “risk of a short-term top has increased” and added yesterday (14 Nov, spot at 108.80) that “a short-term top is place and USD is likely to trade sideways for a period”. USD subsequently dropped below the bottom of our expected 108.45/109.30 range (low of 108.23) before recovering. The rapid decline has resulted in an improvement in downward momentum and from here, USD is expected to remain under pressure. Only an unlikely move back above 109.15 (‘strong resistance’ level) would suggest that downward pressure eased. Until then, the bias is for USD to trade lower towards 108.00 followed closely by a strong support at 107.85″.