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In view of FX Strategists at UOB Group, USD/JPY remains vulnerable although it is unlikely to breach below the 107.00 area in the near-term.

Key Quotes

24-hour view: “The sudden and sharp plunge in USD came as a surprise as it cracked several strong support levels with ease. While the rapid drop is severely oversold, it is too early to expect a recovery. USD could continue to weaken but for today, the next support at 107.50 is unlikely to come under threat. Resistance is at 108.25 followed by 108.50”.

Next 1-3 weeks: “We held the view last Thursday (02 Jan, spot at 108.70) that USD is ‘expected to trade with a downward bias but the November’s low of 107.87 could be out of reach’. While our view for USD to move lower was not wrong, the sudden and sharp pick-up in momentum was unexpected as USD plunged to a low of 107.82 on Friday. The rapid decline appears to be running ahead of itself but with no sign of stabilization, USD could continue to weaken from here. At this stage, the prospect of a break of the major 107.00 support is not high. On the upside, only a move above 108.85 would indicate that the current weakness has stabilized.”