A further downside correction could drag USD/JPY to the 133.50 region on the short-term horizon, say UOB Group currency strategists Lee Sue Ann and Quek Ser Leang.
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24 hour view: “The strong sell-off that saw USD/JPY plunge to a low of 134.25 came as a surprise (we were expecting a sideways trend). Although the rapid decline appears to be early, the downside risk remains intact. That said, it is unlikely any weakness to break 134.00. To the upside, breakout of 135.65 (minor resistance is at 135.30) would indicate current bearish pressure has eased.”
Next 1 to 3 weeks: “The USD/JPY strength that began earlier this week ended quickly as yesterday’s sharp pullback broke through our ‘strong support’ level at 135.00 (low has been 134.25). The rapid pullback has room to extend into 133.50 Overall, only a break of the ‘strong resistance’ level, currently at 136.00, would indicate that the pullback is not poised to extend lower.”
Source: Fx Street
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