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FX Strategists at UOB Group do not favour a deeper retracement in USD/JPY to the 107.60 region.

Key Quotes

24-hour view: “The weakness in USD from last Friday stabilizes sooner than expected as it traded between 108.31 and 108.79 (we were expecting another leg lower to 108.05). The current movement is viewed as on-going consolidation phase and USD is expected to trade between 108.30 and 108.90 for today.”

Next 1-3 weeks: “It took a few days but the 108.40 level that was first indicated last Tuesday (28 Jan, spot at 108.95) finally came into the picture as USD dropped to 108.30. The price action is timely as we indicated earlier last Friday (31 Jan, spot at 108.95) that ‘USD has to move and stay below 108.60 within these 1 to 2 days or the odds for further weakness would diminish quickly’. While the weak daily closing in NY suggests the risk of a recovery has dissipated, downward momentum has not improved by as much as preferred. From here, further USD weakness would not be surprising but at this stage, the prospect for a move to last month’s low near 107.65 is not high. On the upside, the ‘strong resistance’ level has moved lower to 109.15 from last Friday’s level of 109.50.”