USD/JPY: Downside momentum picks up pace – UOB

USD/JPY could slip back to the mid-104.00s in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected ‘further USD weakness’ yesterday but held the view that the ‘solid support at 105.30 is likely out of reach’. However, USD edged below 105.30 and touched 105.27. While oversold, the decline is not showing sign of stabilizing just yet and from here, USD could test the 105.00 level. For today, the next support at 104.70 is unlikely to come into the picture. Resistance is at 105.60 followed by 105.90.”

Next 1-3 weeks: “While we indicated earlier yesterday (18 Aug, spot at 105.85) that USD ‘is likely to trade with a downward bias towards 105.30’, we did not quite expect the level to be reached so soon (overnight low of 105.27). Downward momentum has improved further and the next level to focus on is at 104.50. Overall, USD is expected to stay under pressure from here unless it can move above 106.30 (‘strong resistance’ level was at 106.65 yesterday).”