USD/JPY: Diminishing odds for a move below 106.00
In light of the recent performance, USD/JPY risks further weakness in the near term, in opinion of FX Strategists at UOB Group.
24-hour view: “Our view for USD yesterday was that it “could edge higher but any advance is viewed as part of a 107.60/109.00 range”. USD subsequently rose to 108.72 before dropping sharply to a low of 107.44. Despite the rapid decline, downward momentum has not improved by as much. That said, a dip below 107.00 would not be surprising but in view of the less than stellar momentum, any weakness in USD could be limited to a test of 106.60. Resistance is at 108.00 followed by 108.40. The 108.72 high is likely ‘safe’ for today.”
Next 1-3 weeks: “We detected the short-term top in USD relatively early when we indicated last Thursday (26 Mar) when it was trading at a much higher level of 110.70 that “risk of a short-term top in USD has increased”. As USD subsequently dropped, we indicated that “a short-term top is in place; USD could weaken further to 107.00”. USD dropped to 107.10 on Monday (30 Mar) but since then, it appears to be a bit hesitant in extending its down move. For now, we continue to see chance for further weakness as the next support of note below 107.00 is not until 105.90. That said, in view of the lackluster momentum, this level may be out of reach this time round (there is a minor support at 106.60). All in, the current weakness in USD is deemed as intact until there is a breach of 109.40 (‘strong resistance’ level was previously at 109.80).”