In the opinion of the currency strategists at UOB Group, the USD / JPY could fall back to 109.50 In the next weeks.
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24 hour view: “Yesterday, we held the view that USD / JPY ‘could test 110.75 first before a pullback can be expected.’ Subsequently, USD / JPY rose to 110.69 before making a surprisingly steep decline to 109.92. The rapid decline has Room to extend lower, but oversold conditions suggest main support at 109.50 is out of reach (there is another support at 109.70). Resistance is at 110.10 followed by 110.30. “
Next 1-3 weeks: “Our last explanation from yesterday (July 14, USD / JPY at 110.55) where we indicated that USD / JPY ‘is likely to trade between 110.00 and 111.15 for a period of time.’ We were not expecting volatile price action when USD / JPY quickly fell below 110.00. Short-term downside momentum is starting to improve and USD / JPY is likely to trade a bias lower towards 109.50. At this time, the odds of a sustained decline by below this level they are not high. The current soft downside pressure is considered intact as long as the “strong resistance” at 110.55 “is not exceeded.
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