USD/JPY: Prospects for extra downside unchanged – UOB

USD/JPY still risks further decline in the short-term horizon, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the outlook for USD still appears to be on the soft side but any weakness is unlikely to challenge the major support at 107.65’. However, USD traded in a relatively quiet manner between 107.86 and 108.28 before closing little changed at 108.05 (-0.03%). The underlying tone still appears to be a tad soft but any weakness is viewed as part of a lower range of 107.80/108.25. In other words, a clear break of 107.80 is unlikely.”

Next 1-3 weeks: “USD traded in a quiet manner and our latest narrative from Tuesday (20 Apr, spot at 108.15) still stands. As highlighted, USD is likely to weaken further but the major support at 107.65 may not come into the picture so soon. On the upside, a break of 108.55 (‘strong resistance’ level previously at 108.85) would indicate that the pullback in USD that started about 2 weeks ago has run its course. Looking ahead, the next support below 107.65 is at 107.30.”