USD/JPY outlook shifted to neutral – UOB

In opinion of FX Strategists at UOB Group, the pair’s near term stance has now shifted to neutral from bearish.

Key Quotes

24-hour view: “USD rocketed to a high of 110.47 last Friday before easing off. The rally is over-extended and further sustained gain is not expected for now. That said, it is too early to expect a significant pull-back and USD is more likely to consolidate its gain and trade sideways at these higher levels. Expected range for today; 109.70/110.40”.

Next 1-3 weeks: “The sharp swing higher in USD last Friday that took out the 110.30 ‘stop-loss’ for our bearish view came as a surprise. The bearish phase that started on 25 Jan (spot at 109.30) has ended. Despite the strong up-move, we view the USD strength as part of a corrective rebound and not the start of a bullish phase. That said, the recovery has scope to extend higher to 110.80. Overall, after the strong rally last Friday, USD is expected to stay underpinned in the next several days with 109.20 as a key short-term support”.