USD/JPY further downside lies ahead – UOB

In view of FX Strategists at UOB Group, USD/JPY should meet some downside pressure in the next weeks.

Key Quotes

24-hour view: “Expectation for USD to “dip below 107.20” did not materialize as it rebounded strongly to high of 107.96 during NY hours. The recovery is running ahead of itself and while a test of 108.00 would not be surprising, any USD strength is viewed as a higher trading range of 107.40/108.00 and not the start of sustained up-move”.

Next 1-3 weeks: “There is not much to add to the update from last Friday (19 Jul, spot at 107.40). As highlighted, despite the sharp decline on Thursday, we have doubts about the sustainability of any USD weakness. That said, the immediate bias is tilted to the downside but the prospect for a sustained decline below June’s low of 106.77 is not high. On the upside, only a move above the 108.20 resistance would indicate that the current downward bias has eased”.