USD/JPY sticks to the neutral bias near term – UOB

According to FX Strategists at UOB Group, the pair’s decline still appears overextended although without any sign of stabilization yet.

Key Quotes

“Instead of trading sideways as expected, USD dipped to a low of 110.60 before recovering. While downward momentum is not strong, the undertone is still negative and USD is expected to grind lower towards 110.50. Resistance is at 111.30 but only a move back above 111.65 would indicate the start of a more sustained recovery”.

“We still view the current decline as severely over-extended but with no signs of stabilization just yet, another push lower towards 110.00 cannot be ruled out (even though the odds for such a move are not high). All in, the current downward pressure would ease only if USD can move and stay above 112.00”.