UOB Group currency strategists note that selling pressure in the US is expected to USD / JPY finds solid support at the 109.00 zone.
Key comments:
24 hour view: “USD / JPY spiked to 109.95 last Friday before releasing to close firm at 109.65. The underlying tone is firm and there is room for USD / JPY to retest the 109.95 level. For today, a sustained advance above this level is unlikely (next resistance is at 110.15). Support is at 109.45 followed by 109.30 “.
Next 1-3 weeks: “Last Tuesday (April 6, USD / JPY at 110.30), we saw a ‘short-term ceiling in USD / JPY’ and we are of the opinion that ‘the corrective pullback has room to drop to 109.55’. After USD / JPY broke 109.55, we indicated on Wednesday (Apr 7, USD / JPY at 109.75) that ‘in view of the vastly improved bearish momentum, the current USD / JPY retracement could extend to 109.05.’ Our expectations were not wrong, as the USD / JPY subsequently fell to 108.98 before rebounding. The strong bounce from the low has affected bearish momentum and the possibility of a sustained decline below 109.00 is not high (next support is at 108.40). That said, only one. A breakout of 110.35 (previously ‘strong resistance’ level at 110.55) would indicate that downside risk has dissipated. “
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