In opinion of FX Strategists at UOB Group, USD/JPY is likely to trade within a sideline theme in the next weeks.
Key Quotes
24-hour view: “We indicated yesterday that “upward momentum has not improved by much” but “USD could test 106.35”. We added, “106.70 is not expected to come into the picture”. The subsequent USD advance exceeded our expectation as it came close to taking out 106.70 (overnight high of 106.67). Despite the swift pull-back from the high, positive momentum indicators suggest USD could move above 106.70 from here. That said, a break of the next resistance at 107.00 would come as a surprise. Support is at 106.30 but only a move below 106.10 would indicate that the current upward pressure has eased”.
Next 1-3 weeks: “USD rebounded and recouped all of Tuesday’s (27 Aug) decline. The ‘one day up, one day down’ price action offers no fresh clues and we continue to hold the view that USD is likely to “trade sideways and within a broad range”. As highlighted on Tuesday (27 Aug, spot at 106.00), the outlook is mixed and USD could trade between 105.00 and 107.00 for now”.
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