USD/JPY: Next of note on the downside comes 134.00 – UOB

Further decline in USD/JPY is predicted to meet the next solid support at 134.00, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “Yesterday, we indicated that ‘The strong downward momentum in USD is likely to continue’. We added, ‘The support levels to monitor are at 136.40 and 135.50’. USD took out both support levels as it plunged to a low of 135.20 in NY trade. While further weakness is not ruled out, the massive drop over the past couple of days is overextended and it remains to be seen if USD could challenge the next support at 134.00 today. Resistance is at 135.90, a breach of 136.50 would indicate that the weakness in USD has stabilized.”

Next 1-3 weeks: “We indicated yesterday (01 Dec, spot at 137.20) that the strong surge in downward momentum is likely to lead to further USD weakness to 136.40, as low as 135.50. While our view was correct, we did not quite expect 135.50 to come view so soon as USD nose-dived to a low of 135.20. Downward momentum is unsurprisingly, still strong but it is left to be seen if USD could maintain the frenetic pace of decline. The next level to watch is at 134.00. On the upside, a breach of 137.05 (‘strong resistance’ level was at 138.55 yesterday) would indicate that the weakness in USD has stabilized.”