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The view on USD/JPY remains negative and could extend the drop to the 104.00 level in the next weeks, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could drift downwards but any weakness is viewed as a lower trading range of 104.40/105.00’. However, USD traded between 104.63 and 105.05 before settling slightly higher at 104.82 (+0.12%). The underlying tone still appears to be soft and we see chance for USD to drift lower from here. That said, a sustained decline below 104.50 is unlikely. Resistance is at 105.05.”

Next 1-3 weeks: “There is not much to add to our latest narrative from last Thursday (22 Oct, spot at 104.65). As highlighted, USD ‘is expected to stay on the defensive but it is left to be seen if it can crack the September’s low near 104.00’. On the upside, a break of 105.40 (no change in ‘strong resistance’ level) would indicate the current downside risk has dissipated.”