USD/JPY now faces some consolidation – UOB
FX Strategists at UOB Group now expect USD/JPY to trade within a consolidative mood in the next weeks.
24-hour view: “Our expectation for USD to ‘consolidate and trade sideways’ was wrong as it dropped sharply for the third straight day. The decline over the past few days appears to be running ahead of itself. However, there is no sign of stabilization just yet and further weakness is not ruled out. That said, we view any decline from here as part of a lower trading range of 109.65/110.60 (a sustained drop below 109.65 is not expected).”
Next 1-3 weeks: “We highlighted yesterday (24 Feb) that ‘if USD were to break 111.20, it would indicate it need more time to muster enough momentum to challenge to the critical 112.40 level’. However, the manner by which USD cracked 111.20 and the subsequent plunge to a low of 110.32 came as a surprise. The price action suggests that last Thursday’s (20 Feb) high of 112.21 is a top, albeit likely a temporary one. From here, USD could continue to trade in volatile manner but is expected to stay to within last week’s broad 109.64/112.21 for a while.”