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USD/JPY could lose further ground and recede to the 106.00 region in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘could dip below last week’s low at 106.34’ and added, “the next support at 106.00 is not likely to come into the picture”. Our expectation did not materialize as USD only touched 106.40 during NY hours (before extending its decline after NY close). The underlying tone still appears to be soft and from here, barring a move above 106.75 (minor resistance at 106.60), USD could edge lower and test the major support at 106.00. For today, the odds for sustained decline below this level are not high (next support is at 105.70).”

Next 1-3 weeks: “Our expectation for USD ‘to weaken to 106.00’ from last Thursday (29 Apr, spot at 106.65) did not materialize as it rebounded strongly and took out the ‘strong resistance’ level at 107.35. Downward pressure has eased and USD has likely moved into a consolidation phase. In other words, USD is likely to trade sideways from here, expected to be within 106.00/107.50 range. Looking further ahead, USD has to close below 106.00 before a sustained weakness can be expected.”