It is expected that the USD / JPY maintain consolidation between 108.80-110.00 in the coming weeks, as suggested by currency strategists at UOB Group.
Key Comments:
24 hour view: “While we highlighted yesterday that ‘deep overbought conditions suggest that USD / JPY is unlikely to strengthen further’, we expected USD / JPY to ‘consolidate and trade between 109.50 and 110.05’. However, USD / JPY fell sharply to 109.34 before settling on a soft tone at 109.54 (-0.25%). The sharp decline appears to be ahead of itself, but there is room for USD / JPY to dip below strong support at 109.30. For today, next support at 109.10 is unlikely to enter the scene. Resistance is at 109.65 followed by 109.85 “.
Next 1-3 weeks: “In our latest narrative last Friday (May 28, USD / JPY at 109.90), we indicated that ‘strong momentum suggests greater USD / JPY strength.’ While USD / JPY rose to 110.19, the subsequent pullback was close to eliminating our ‘strong support’ at 109.30 (prior day low of 109.34). Rapid loss of momentum suggests USD / JPY strength has ended earlier than expected. USD / JY is likely to consolidate and consolidate. move between 108.80 and 110.00 for now. “
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