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USD / JPY could fall back to the 108.00 zone – UOB

According to the currency strategists at UOB Group, USD / JPY is at risk of a possible move below 108.40 on the short-term horizon.

Key Comments:

24 hour view: “Our expectations for USD / JPY to ‘weaken further’ did not materialize as it traded surprisingly calm between 108.74 and 109.09. Momentum to the downside has clearly faded, but there is still room for USD / JPY to turn lower. That being said, the main support at 108.40 is probably out of reach for today. Resistance is at 109.10 followed by 109.30 ”.

Next 1-3 weeks: “We have been holding a negative view on USD / JPY for over a week. In our last note on Monday (April 12, USD / JPY at 109.65), we highlighted that ‘the downside risk in USD / JPY remains intact, but the possibility of a sustained decline below 109.00 is not high’. In other words, we do not fully anticipate yesterday’s sudden drop and the ease with which USD / JPY broke through the 109.00 region earlier. The vastly improved momentum indicates that the retracement that started early last week could extend to 108.40, with lower odds of an extension to 108.00. In general, USD / JPY is considered to be under pressure as long as it does not break above 109.60 (the ‘strong resistance’ level was at 110.35 yesterday). “

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