USD/JPY a drop to 111.30 remains on the cards – UOB

FX Strategists at UOB Group stay neutral on USD/JPY, suggesting a potential drop to the 111.30 area.

Key Quotes

“Instead of trading sideways as expected, USD dropped to a low of 111.61 but recovered quickly. While the undertone still appears to be negative and a move below 111.60 would not be surprising, the current movement is viewed as part of a lower consolidation range and a sustained down-move is not expected”.

“As noted in recent days, as long as 112.90 is not taken out, the immediate risk is tilted to the downside towards 111.30 (overnight low has been 111.61). That said, the lackluster price action has resulted in a quick loss in downward momentum and the odds further USD weakness have diminished considerably. However, only a move back above 112.90 would indicate that a temporary low is in place”.