USD/JPY appears consolidative near term – UOB

The pair’s outlook stays neutral and it is expected to move into a consolidation mode, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday there is still ‘chance for a test of 104.50 before a rebound can be expected’. The strong support was untested as USD rebounded strongly and hit a high of 105.48. While the up-move appears to be running too fast, too soon; further advance above 105.80 seems likely but the next strong resistance at 106.05 is likely out of reach. Support is at 105.15 followed by 104.80”.

Next 1-3 weeks: “Despite the sharp decline late last week, we highlighted that we are “not convinced that the current month-long neutral phase has shifted to bearish”. However, the sharp and swift bounce yesterday came as a surprise. Downward pressure has eased and the 104.55 low registered early yesterday is likely a short-term low. There is no change to the neutral outlook but instead of ‘probing’ the next support at 104.00 (as expected previously), USD has likely moved into a broad 104.80/106.65 range. After the sharp rebound yesterday, the short-term bias is tilted to the upside but 106.65 is a major level and is unlikely to yield so easily”.