UOB Group’s FX strategists are waiting USD / JPY to extend the consolidation theme between 103.75 and 105.20 in the coming weeks.
24 hour view: “Yesterday we noted that ‘bearish momentum is starting to weaken and the chances of further USD weakness are low” and we expected the USD ” consolidates and trades sideways within a range of 103.70 / 104.20 ”. Our expectations were not wrong as the USD was trading between 103.70 and 104.21. The underlying tone has weakened somewhat and we have the chance for the USD to dip to 103.60 before we can expect a more sustained rebound. For today, the next support at 103.18 should not come into play. Resistance is at 104.20 but the highest level is at 104.50. “
Next 1-3 weeks: “Two days ago (November 17th, spot at 104.45) we reported that ‘there is a slight downward bias in the USD but any weakness is considered part a lower trading range of 103.75 / 105.20 ”. We added that the USD “should close below 103.75 to indicate that it is ready to move closer to last week’s low of 103.18”. The USD fell as low as 103.63 yesterday before rebounding. While the underlying tone still looks soft, the outlook for the USD to move to 103.18 from here is not high. That said, only a breakout of 104.50 would indicate that the current slight downward pressure has eased.