UOB Group currency strategists note that the USD / JPY risks a potential drop to the 108.40 zone and probably lower in the next few weeks.
Key Comments:
24 hour view: “Yesterday, we highlighted that ‘the downside momentum has clearly subsided, but there is still room for USD / JPY to turn down.’ We added, ‘main support at 108.40 is probably out of reach.’ Our opinion was not wrong, already that USD / JPY fell to 108.60. Bearish momentum has weakened further and the pair is unlikely to weaken. For today, USD / JPY is more likely to move sideways between 108.60 and 109.15 “.
Next 1-3 weeks: “There is not much to add to our last note from two days ago (April 14, USD / JPY at 108.85). As highlighted, the pullback in USD / JPY that started early last week could extend to 108.40. The extension to 108.00 is not ruled out, but the odds are lower. On the upside, a breakout of 109.40 (previously ‘strong resistance’ level at 109.60) would indicate that the current bearish pressure has eased. “
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