According to FX Strategists at UOB Group, USD/JPY could well breach the 105.00 key support in the near term.
Key Quotes
24-hour view: “As cited in our last update on 8-Aug, we were ‘unclear whether USD has made its interim low (at 105.48)’ and true enough USD printed a new low of 105.03 on Mon. However, downside momentum has not caught up with the move so although the undertone is still negative, a strong sustained down move is not expected today. That said, 105.00 continues to be a strong support level together with 104.75. On the topside, resistances are at 105.55 and 105.95″.
Next 1-3 weeks: “Our last narrative was for key support at 105.50 and Jan’s flash crash low of 104.96 to “quickly come into focus” should 106.00 be taken out. Despite a strong bounce to 107.07 on 6-Aug, sellers were quick to sell into the rally and USD even printed a new low of 105.03 overnight (12-Aug). With the move, it is clear that downside momentum is rebuilding and a subsequent break below 105.00 in the next couple of days would not come as a surprise. In the last session sessions, USD On the upside, resistance is expected at 107.10 and only a recovery above 107.90 would indicate that downside pressures on the USD have eased.” Below 105.00, stiff support can be expected at March 2018’s key cycle low of 104.55. On the topside, expect resistance at 106.50 and 107.20″.
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