USD/JPY could grind lower and test 111.20 – UOB

The pair remains neutral although it could drop to the 111.20 area, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The major support indicated at 111.80 yesterday did not break as USD recovered quickly after touching a low of 111.81. The rapid and robust rebound appears to be running ahead of itself and we do not expect further USD strength from here. USD is more likely to consolidate and trade sideways, likely between 112.00 and 112.70”.

Next 1-3 weeks: “USD came within one pip of the 111.80 support before staging a surprisingly robust recovery. We indicated yesterday, the risk of a break of 111.80 has increased and a “break would suggest further USD weakness to 111.20”. We continue to hold the same view and only a move above 112.80 (no change in ‘key resistance’) would indicate that the current downward pressure has eased. Looking ahead, a break of 112.80 would not signify the start of a sustained up-move but suggest that USD is still ‘caught’ within a 111.80/113.30 consolidation range”.