USD/JPY now seen within the 113.20-114.70 range – UOB

USD/JPY could have now moved into a consolidative phase, likely between the 113.20-114.70 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘upward pressure has eased’ and we expected USD to ‘trade sideways between 114.00 and 114.55’. Our view was incorrect as USD dropped to 113.63 before rebounding quickly. Despite the decline, downward momentum has barely improved and USD is unlikely to weaken further. For today, USD is more likely to trade between 113.65 and 114.40.” 

Next 1-3 weeks: “We first detected USD strength more than 2 weeks. As USD surged, in our latest narrative from Wednesday (20 Oct, spot at 114.50), we highlighted that ‘the focus now is at 115.00 even though deeply overbought conditions suggest that the odds for a sustained advance above 115.00 are not high’. We did not anticipate the sharp drop yesterday (21 Oct) that took out our ‘strong support’ at 113.75 (low of 113.63). The break of the ‘strong support’ indicates that USD strength has come to an end. The current movement is viewed as the early stages of a consolidation phase and USD could trade between 113.20 and 114.70 for now.”