The USD / JPY could fall back to the 103.50 region and below that level in the coming weeks, according to UOB Group currency strategists.
Key Comments:
24 hour view: “Last Friday we highlighted that ‘the underlying tone has weakened a bit, and this could lead to USD / JPY falling to 103.95’. We added, ‘the next support at 103.70 is not expected to enter the picture.’ I was not wrong as USD / JPY fell to a low of 103.89 before closing at 104.10 (-0.14%). Bearish momentum is starting to improve and the risk is that USD / JPY will test the 103.70 support. No a drop below this level is ruled out, but it remains to be seen if the pair can sustain a support point below this level (next support is at 103.50). Resistance is at 104.10, followed by 104.30 ”.
Next 1-3 weeks: “Last Tuesday (Nov 24, USD / JPY at 104.55), we indicated that ‘the downward pressure has dissipated’ and we expected USD / JPY to ‘trade between 103.70 and 105.30’. Subsequently, USD / JPY broke moved mostly sideways, but is currently approaching the bottom of the range and bearish momentum is starting to improve. That said, the USD / JPY has to close below 103.50 to indicate that it is ready to tackle the monthly low. at 103.18. The odds of such a move appear to be quite high as long as USD / JPY does not move above 104.50 in these 1-2 days. “
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