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FX Strategists at UOB Group keep the negative view on USD/JPY and still see a potential move to 108.40 in the next weeks.

Key Quotes

24-hour view: “The rapid drop in USD to 108.57 and the equally quick bounce from the low came as a surprise (we were expecting USD to trade sideways). The rapid swing has resulted in a mixed outlook and for today, USD could trade in an undecided manner, likely within a relatively broad range of 108.60/109.15.”

Next 1-3 weeks: “USD rebounded quickly after dropping to a low of 108.57 yesterday and closed little changed at 108.95 (-0.04%). While the price action was not out of line from our view on Tuesday (28 Jan, spot at 108.95) wherein USD is still under pressure and ‘could weaken further to 108.40’, the quick bounce has dented the downward momentum. For now, we continue to hold the same view but USD has to move and stay below 108.60 within these 1 to 2 days or the odds for further weakness would diminish quickly. On the upside, the ‘strong resistance’ level remains unchanged at 109.50 for now.”