The pair USD / JPY could have moved into a consolidation phase, probably between the range of 113.20-114.70 in the coming weeks, suggest currency strategists at UOB Group.
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24 hour view: “We highlighted yesterday that ‘the upward pressure has eased’ and we expected USD / JPY to ‘move sideways between 114.00 and 114.55’. Our view was incorrect as USD / JPY fell to 113.63 before rapidly rebounding. Despite the decline, the downside momentum has barely improved and USD / JPY is unlikely to weaken further. For today, USD / JPY is more likely to trade between 113.65 and 114.40. “
Next 1-3 weeks: “We first spotted USD / JPY strength over 2 weeks ago. As USD / JPY rallied, in our latest Wednesday narrative (Oct 20, USD / JPY at 114.50), we highlight that ‘focus now It is at 115.00 even though overbought conditions suggest the odds of a sustained advance above 115.00 are not high. ”We were not expecting yesterday’s (Oct 21) sharp drop that tested our“ strong support ”at 113.75 ( Low at 113.63). The breakout of the ‘strong support’ indicates that the strength of the USD / JPY has come to an end. The current move is seen as the early stages of a consolidation phase and the USD / JPY could trade between 113.20 and 114.70 for now. “
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