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USD/JPY keeps the consolidation alive so far this week and is seen trading in the 107.00/108.20 range in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday the “rapid advance in USD could test 108.00 first before easing off”. USD subsequently touched 107.95 before pulling back to end the day little changed at 107.82 (+0.06%). Upward pressure has eased and the risk of a sustained advance in USD is deemed as low. USD is more likely to consolidate and trade sideways for today, expected to be between 107.45 and 107.95″.

Next 1-3 weeks: “We highlighted on Tuesday (24 Sep, spot at 107.55) that a “short-term top is in place” and expected USD to trade sideways to “slightly lower” within a 107.10/108.20 range. Despite the subsequent sharp drop to 106.95, we indicated yesterday (25 Sep, spot at 107.15) that USD “does not appear to be ready for a sustained down-move” and “only a NY close below 106.90 would suggest that USD is ready to challenge the major 106.20 support”. That said, the rapid manner by which USD recovered its loss was not exactly expected (USD surged to an overnight high or 107.88). The price action suggests that USD is still in sideway-trading phase, likely within a 107.00/108.20 range”.