USD/JPY upside pressure eased – UOB

FX Strategists at UOB Group assessed the recent price action around USD/JPY.

Key Quotes

24-hour view: “Expectation for USD to extend its gains did not materialize as it plummeted and hit an overnight low of 110.93. The swift drop appears to be running ahead of itself but there is scope for probe of the next support at 110.75 before stabilization can be expected (this level is followed by the major 110.50 support). On the upside, stabilization is only upon a move back above 111.55 (minor resistance is at 111.25)”.

Next 1-3 weeks: “One day after making a 4-week high of 111.82 on Wednesday (29 Aug), USD surrendered all its gains and more as it plummeted to end the day on a weak note (NY close of 110.93, -0.61%). The weak daily closing is enough to suggest that the recent upward pressure has eased (even though the overnight low of 110.93 was above the 110.90 ‘key support’). From here, the major 112.14 resistance is likely to remain unthreatened as USD has likely moved back into a consolidation phase. To put it another way, there is no change to the neutral outlook but USD is expected to trade sideways from here, likely between 110.35 and 111.80”.