UOB Group’s FX Strategists noted the outlook for USD/JPY keeps pointing to further decline in the near-term.
Key Quotes
24-hour view: “Our expectation for USD to ‘edge higher’ was wrong as it plummeted to 108.34 before staging a swift and sharp rebound. Despite the sharp drop, downward momentum has barely improved and USD is unlikely to weaken. For today, USD is more likely to trade sideways between 108.50 and 109.00.”
Next 1-3 weeks: “We continue to hold the same view as from Monday (10 May, spot at 108.80). As highlighted, the near-term bias is on the downside but we are mindful of the strong support at 108.20. USD dropped to 108.34 yesterday (11 May) but the decline was short-lived as it rebounded quickly. Downward momentum is beginning to show signs of easing and the prospect for USD to move to 108.20 has diminished somewhat. That said, the downward bias is deemed intact as long as USD does not move above 109.20 (‘strong resistance’ level previously at 109.35).”