USD/JPY bearish on a close below 105.20 – UOB

The pair current outlook should turn to bearish on a close below the 105.20 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The anticipated weakness exceeded our expectation by a wide margin as USD cracked a few strong support levels with ease and crashed to a low of 105.23 last Friday. Despite the bounce from the low, it is too early to expect a sustained recovery. From here, a retest of 105.20/25 would not be surprising but the next support at 105.00 is likely out of reach for now. Stabilization is only upon a move back above 106.20 (minor resistance is at 105.90)”.

Next 1-3 weeks: “We highlighted last Friday (02 Mar, spot at 106.25) that the immediate pressure has shifted to the downside and expected USD to retest the strong 105.50 support. The subsequent sharp and rapid decline in USD easily took 105.50 and hit a low 105.23. Despite the break of 105.50, we are not convinced that the current movement is the start of a bearish phase. Only a NY close below 105.20 would indicate that a sustained move towards 104.50, 104.00 has started. That said, USD is expected to stay under pressure in the next few days unless it can reclaim 106.70. On a shorter-term note, 106.20 is already a strong resistance”.