Further losses could drag USD/JPY to the 132.00 region and below in the coming weeks, suggest UOB Group currency strategists Lee Sue Ann and Quek Ser Leang.
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24 hour view: “While we expected ‘USD/JPY oversold weakness to extend’ last Friday, we are of the opinion that ‘a break of major support at 133.80 is unlikely’. The subsequent sell-off that saw USD/JPY crash to 132.49 was a surprise Although deeply oversold, USD/JPY weakness has not stabilized From here, unless it breaks above 134.00 (minor resistance is at 133.50), USD/JPY could weaken to 132.00 (minor support is 132.50) before stabilization is likely. For today, major support at 131.70 is unlikely to be challenged.”
Next 1-3 weeks: “Last Thursday (July 28, USD/JPY at 135.90) we turned against USD/JPY. As USD/JPY fell, we highlighted on Friday (July 29, USD/JPY at 134.50) that the momentum bearish remains strong and USD/JPY is likely to weaken further to 133.80 USD/JPY weakness exceeded our expectations as USD/JPY easily broke 133.80 and tumbled to as low as 132.49. Unsurprisingly bearish momentum remains strong and USD/JPY is likely to weaken further Support levels are at 132.00 and 131.70 Downside risk is intact as long as USD/JPY does not move above 134.55 (the ‘strong resistance’ level was at 135.85 last Friday).
Source: Fx Street
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