USD/JPY now looks to retest 133.80 – UOB

Extra weakness could drag USD/JPY to revisit the 133.80 region in the near term, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “While we expected USD to weaken yesterday, we were of the view ‘135.00 is likely out of reach for now’. The anticipated weakness exceeded our expectations by a wide margin as USD plunged to a low of 134.18. While deeply oversold, the weakness in USD could extend but a break of the next major support at 133.80 appears unlikely. On the upside, a breach of 135.25 (minor resistance is at 134.90) would indicate that the weakness in USD has stabilized.”

Next 1-3 weeks: “We highlighted yesterday that the rapidly improving shorter-term downward momentum suggests the risk for USD is on the downside towards 135.00. Our view for a weaker USD was not wrong but we did not anticipate the outsized sell-off as USD plunged by 1.66% (NY close of 134.28), its largest 1-day drop since Nov last year. Not surprisingly, downward momentum remains strong and USD is likely to weaken further. The next level to monitor is at 133.80. The downside risk is intact as long as USD does not move above 135.85 (‘strong resistance’ level was at 137.00 yesterday).”