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USD/JPY now shifted its attention to the 104.80 level for the time being, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected USD to ‘trade between 105.25 and 105.75’ yesterday. However, it dropped to 105.14 before closing on a soft note at 105.22 (-0.13%). Downward momentum has improved, albeit not by much. From here, there is room for USD to edge lower but any weakness is unlikely to break the strong support at 104.80 (there is another support at 105.00). Resistance is at 105.35 followed by 105.60.”

Next 1-3 weeks: “We have held a positive view in USD since late last month. Our latest narrative was from last Friday (05 Feb, spot at 105.50) where we highlighted that ‘further USD strength is likely and the next level to focus on is at 106.00’. USD subsequently rose to 105.76 but has since retreated sharply. Upward momentum has been dented and a break of 104.80 (no change in ‘strong support’ level) would indicate that 106.00 is out of reach this time round. In order to rejuvenate the flagging momentum, USD has to move and stay above 105.60 within these 1 to 2 days or a break of 104.80 would not be surprising.