USD/JPY faces some near-term consolidation – UOB

According to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, USD/JPY could attempt some consolidation in the very near term ahead of the probable resumption of the downside.

Key Quotes

24-hour view: “Last Friday, we highlighted that ‘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’. USD subsequently plummeted to 133.60, rebounded to 135.97 before dropping back down to close at 134.30 (-0.72%). Downward pressure appears to have eased somewhat and this combined with oversold conditions suggests USD is unlikely to weaken further. Today, USD is more likely to trade sideways between 133.80 and 135.65.”

Next 1-3 weeks: “Last Friday (01 Dec, spot at 137.20), we highlighted that downward momentum is still strong but it is left to be seen if USD can maintain the frenetic pace of decline. We indicated, the next level to watch is at 134.00. USD subsequently plummeted to 133.60 before rebounding. Further USD still appears likely even though oversold short-term conditions could lead to 1-2 days of consolidation first. The next level to monitor is at 133.00. On the upside, a breach of 136.70 (‘strong resistance’ level was at 137.05 last Friday) would indicate that the weakness in USD that started late last month has stabilized.”