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According to FX Strategists at UOB Group, there is still scope for USD/JPY to re-test the 104.40 region in the near-term.

Key Quotes

24-hour view: “Our expectation for USD to ‘weaken further’ did not materialize as it rebounded strongly after touching 104.91. Downside risk has more or less dissipated and the current movement is viewed as part of a consolidation. For today, USD is likely to trade within a 105.00/ 105.50 range.”

Next 1-3 weeks: “We have held a positive view in USD since early last week. After USD retreated after touching 106.21, we cautioned yesterday (22 Feb, spot at 105.50) that ‘upward momentum has waned quickly’ and ‘prospect for further USD strength has diminished considerably’. The positive phase came to an end as USD took out our ‘strong support’ level at 105.00 yesterday (low of 104.97) The current movement is viewed as a pullback that has scope to test month-to-date low at 104.40. At this stage, the prospect for a sustained decline below this level is not high. On the upside, a break of the ‘strong resistance’ at 105.65 would indicate the current downward pressure has eased.”

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