In light of the recent price action, the possible advance to 112.20 in the USD / JPY pair looks somewhat deflated for the moment, suggest the currency strategists at UOB Group.
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24 hour view: “We highlighted yesterday that USD / JPY ‘could test 112.20 first before the risk of a retracement increases.’ Subsequently, USD / JPY rose to 112.07 before making a surprisingly sharp pullback (111.22 low). fast has room to extend, a breakout of the strong support at 111.10 looks unlikely (next support is at 110.80). Resistance is at 111.60, followed by 111.85. “
Next 1-3 weeks: “We have expected USD / JPY to strengthen since last Friday (September 24, USD / JPY at 110.30). As USD / JPY rose in the last week, we noted yesterday (September 30, USD / JPY at 111.90) that “further USD / JPY strength is not ruled out, but deeply exaggerated conditions indicate that the pace of any advance is likely to be slower.” We did not expect the sharp pullback to a low of 111.22 during the New session. York. While our “strong support” level at 111.10 remains intact, the rapid loss of momentum suggests that the next resistance at 112.20 may not enter the picture this time. In order to rejuvenate momentum, the USD / JPY has to to move and stay above 111.85 within these 1-2 days or a breakout of 111.10 would not be surprising. “
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