Additional weakness appears to be the name of the game for USD/JPY at the moment, according to Economist Lee Sue Ann and Market Strategist Quek Ser Leang at UOB Group.
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24-hour outlook: The sharp and rapid decline that took USD/JPY to a low of 148.13 was a surprise (we expected a range-bound trade). No wonder the drop is severely oversold. However, there is room for USD/JPY to fall to 147.60 before stabilization can be expected. Today, the next support at 147.35 could be out of reach. To the upside, if USD/JPY breaks above 148.90 (minor resistance), it would indicate that the weakness has likely stabilized.
Next 1-3 weeks: After USD/JPY fell to 149.18 the previous day, yesterday (November 20, USD/JPY at 149.90) we highlighted that “the increase in bearish momentum is not enough to suggest that USD/JPY is ready to head towards the decreases in a sustained manner”. In our view, USD/JPY must break clearly below the main support near 148.90 before a sustained decline is likely. We had not anticipated the sharp drop that occurred when USD/JPY broke below 148.90 and plummeted to 148.13. There is a clear increase in momentum, and USD/JPY is likely to continue lower to 147.35. The risk of further decline in the USD will remain as long as it does not break above 149.70 (the “strong resistance” level was at 151.10 yesterday).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
