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USD/JPY could accelerate the downtrend to the sub-104.00 area in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected ‘further USD weakness’ yesterday but held the view that ‘the major support at 104.00 could be out of reach’. Our view was not wrong as USD recovered after touching a low of 104.10. Downward momentum has waned and the weakness in USD is likely to take a breather from here. In other words, USD is likely to consolidate and trade sideways, expected to be between 104.15 and 104.65.”

Next 1-3 weeks: “We have held the same view since last Thursday (22 Oct, spot at 104.65) wherein USD ‘is expected to stay on the defensive but it is left to be seen if it can crack the September’s low near 104.00’. After the drop to a low of 104.10 yesterday, downward momentum has improved albeit not by much. That said, the risk of a break of 104.00 has increased and would continue to increase as long as USD does not move above 105.00 (‘strong resistance’ level previously at 105.20). Looking forward, the next support below 104.00 is at 103.65.”