USD/JPY now moved into a consolidative phase – UOB

UOB Group’s FX Strategists noted USD/JPY is now seen navigating within the 114.55-115.90 range in the next weeks.

Key Quotes

24-hour view: “We expected USD to ‘drift lower’ yesterday but we were of the view that ‘a break of the strong support at 115.30 is unlikely’. However, USD cracked the strong support and plummeted to 115.03. Downward momentum has improved and risk for today is on the downside. As the decline is approaching oversold territory, any dip below the 115.00 may not be sustained (next support is at 114.80). On the upside, a break of 115.60 (minor resistance is at 115.40) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “We held a positive view in USD since early last week (see annotations in the chart below). As USD eased off from a high of 116.34, we highlighted yesterday (10 Jan, spot at 115.60) that the chance for USD to advance to 116.50 has diminished. USD subsequently breached our ‘strong support’ level at 115.30 (low of 115.03). The break of the ‘strong support’ indicates that the positive phase has come to an end. While downward momentum is beginning to build, it is too soon to expect a sustained decline. From here, USD is likely to trade between 114.55 and 115.90.”