USD/JPY risks further weakness in the short term – UOB

24-hour view: Our view for USD to consolidate in a range of 142.00/143.30 yesterday was incorrect. USD rose to a high of 143.00, plunged to 141.26 before closing on a soft note at 141.31 (-0.53%). While the strong decline over the past couple of days appears to be overdone, the weakness in USD has not stabilized. That said, the next major support at 140.05 is unlikely to come under threat today. On the upside, a breach of 142.30 (minor resistance is at 141.75) would suggest the weakness in USD has stabilized.

Next 1-3 weeks: Yesterday (10 Jul, spot at 142.50), we highlighted that “while USD could pullback further; it is worth noting that there is a solid support level at 141.60 and another at 140.95.” We did not expect USD to slice through both support levels as it plunged to a low of 141.26. Not surprisingly, conditions are severely oversold, but the weakness in USD has not stabilized. In other words, USD could weaken further. The next level to watch is 140.05. Overall, only a breach of 143.00 (‘strong support’ level was at 144.00 yesterday) would indicate that USD is not weakening further.