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In opinion of FX Strategists at UOB Group, a move of USD/JPY to the 104.70 region in the short-term seems to be losing traction.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the consolidation phase appears to be on-going, but the slightly firmed underlying tone suggests USD is likely to trade at a higher range of 105.75/106.25’. USD subsequently traded within a higher range than expected (between 105.83 and 106.30). The underlying tone has firmed somewhat and this could lead to USD edging upwards towards 106.55. For today, a clear break of this major resistance appears unlikely. Support is at 106.00 followed by 105.80.”

Next 1-3 weeks: “After plunging to a low of 105.18 last week, USD has not been able to make much headway to the downside as it traded sideways to slightly higher over the past few days. Downward momentum has deteriorated rapidly and the odds for USD to test the solid support at 104.70 have diminished. However, only a breach of 106.55 would indicate that USD has moved back into a consolidation phase. Meanwhile, USD has to move and stay below 105.80 within these 1 to 2 days or a breach of 106.55 would not be surprising.”

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