USD/JPY: To trade in a range between 150.80 and 152.60 – UOB Group
|The US Dollar (USD) is likely to trade in a range between 150.80 and 152.60. In the longer run, downward momentum has surged; deeply oversold conditions suggest 149.40 may not come into view so soon, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Deeply oversold conditions suggest 149.40 may not come into view
24-HOUR VIEW: “When USD was at 153.10 yesterday, we expected it to weaken. However, we pointed out that ‘given the oversold conditions, it may not be able to break clearly below 152.50.’ We underestimated the downward momentum, as USD not only broke below 152.50 but also plunged to a low of 150.44. USD rebounded from the low to close at 151.10, lower by a whopping 1.31%. The outsized decline seems overdone. This, combined with the rebound in deeply oversold conditions, suggests that USD is likely to trade in a range today, probably between 150.80 and 152.60.”
1-3 WEEKS VIEW: “We shifted our outlook from neutral to negative yesterday (27 Nov, spot at 153.10), indicating that USD ‘could edge lower, but it remains to be seen if it can reach 151.60.’ We did not expect the surge in momentum that sent USD plunging to a low of 150.44. Unsurprisingly, there has been a surge in downward momentum. That said, given the deeply oversold short-term conditions, the next support may not come into view so soon. We will maintain our negative USD view as long as 153.00 (‘strong resistance’ level was at 154.35 yesterday) is not breached.”
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