The USD/JPY appears to have opened the door to a likely move towards the 127.50 region in the coming weeks, FX strategists at UOB, Group Lee Sue Ann and Quek Ser Leang.
24 hour outlook: “Our view that the USD was going to trade sideways between 128.80 and 129.80 yesterday was incorrect as the USD crashed to 128.00. Rapid momentum building likely to lead to further dollar weakness, although oversold conditions suggest major support at 127.50 is unlikely to be broken. To the upside, a break of 128.85 (minor resistance is at 128.55) would indicate that the current bearish pressure has eased.”
Next 1-3 weeks: “Last Thursday (May 12, pair at 128.80), we highlighted that the USD was likely to trade above 127.50 for a couple of days before staging a deeper pullback. Subsequently, the USD rallied and in our latest story On Tuesday (May 17, pair at 129.15), we highlighted that the possibility of the dollar moving below 127.50 had diminished.Yesterday, the dollar fell sharply to 128.00 during the New York session and downside momentum suggests dollar could break 127.50. The next support is at 127.00. Downside risk is intact as long as the USD does not move above 129.30 (“strong resistance” level previously at 129.90).”
Source: Fx Street
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