Currency strategists at UOB Group note that the outlook for USD / JPY remains sloping lower on the short-term horizon.
24 hour view: “We highlighted yesterday that ‘the underlying tone still seems a bit soft, but any weakness is considered part of a lower range of 107.80 / 108.25’. We added, ‘a clear breakout of 107.80 is unlikely.’ In line with our expectations, the USD / JPY traded between 107.80 and 108.23 before closing little changed at 107.96 (-0.08%). Today’s bias appears to be sloping to the downside, but main support at 107.65 is unlikely to be threatened (107.80 already it’s quite a strong level.) On the upside, a breakout of 108.25 (the minor resistance is at 108.10) would indicate that the current slight downward pressure has eased. “
Next 1-3 weeks: “USD / JPY has traded quietly for the past few days and our latest Tuesday narrative (April 20, USD / JPY at 108.15) still stands. As highlighted, USD / JPY is likely to weaken further, but main support at 107.65 may not enter the scene so soon. On the upside, a breakout of 108.55 (previously ‘strong resistance’ level at 108.85) would indicate that the pullback in USD / JPY that started about 2 weeks ago is over. Looking ahead, the next support below 107.65 is at 107.30 ”.