Further decline in USD / JPY faces a stiff barrier around 113.60 in the coming weeks, as suggested by currency strategists at UOB Group.
24 hour view: “We expected USD / JPY to ‘test 114.30’ yesterday and we are of the opinion that ‘next support at 114.00 is unlikely to enter the picture.’ Subsequent weakness exceeded our expectations as USD / JPY dipped to 113.98 before settling with a weak tone at 114.17 (-0.40%). Although deeply oversold, USD / JPY weakness has yet to stabilize. That said, any further decline is unlikely to break the main support at 113.60 (there is another support at 113.80 Resistance is at 114.30, but only a breakout of 114.50 would indicate that the current weakness has stabilized. “
Next 1-3 weeks: “We highlighted yesterday (Jan 13, USD / JPY at 114.60) that the downside momentum is beginning to improve, but USD / JPY has to close below 114.30 before a sustained decline can be expected. Thereafter, the USD / JPY fell to 113.98 before closing at 114.17 (-0.40%). While there is room for USD / JPY to weaken further, short-term conditions are oversold and any decline is expected to find solid support. at 113.60. Resistance is at 114.50, but only a breakout of 114.75 would indicate that the current downside risk has dissipated. “