USD/JPY still faces further downside – UOB

A drop and subsequent visit to the 108.70 zone remains on the cards for USD/JPY in the near term, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘there is room for the weakness in USD to test 109.00’. USD subsequently dropped to 109.11 before rebounding strongly. Downward momentum has eased and the current movement is viewed as part of a consolidation phase. For today, USD is likely to trade between 109.25 and 109.70.”

Next 1-3 weeks: “There is not much to add to our update from yesterday (17 Aug, spot at 109.25). As highlighted, risk for USD is still on the downside and break of 109.00 would shift the focus to 108.70. That said, oversold shorter-term conditions could lead to a couple of days of consolidation first. The downside risk is deemed intact as long as USD does not move above 109.90 (no change in ‘strong resistance’ level).”