USD/JPY: Further weakness now points to 148.15 – UOB

The downward bias in USD/JPY could extend to the 148.15 zone in the next few weeks, according to Economist Lee Sue Ann and Markets Strategist Quek Ser at UOB Group.

Key Quotes

24-hour view: Yesterday, we held the view that USD “has scope to test 149.35 before the risk of rebound increases.” We were also of the view that “149.00 is unlikely to come under threat.” Our view was incorrect, as USD plummeted to 148.79 before rebounding. The rebound in oversold conditions suggests USD is unlikely to weaken much further. Today, USD is more likely to trade between 148.75 and 149.75.

Next 1-3 weeks: We noted yesterday (30 Oct, spot at 149.75) that the recent buildup in upward momentum had largely dissipated. We expected USD to trade in a range of 149.00/150.70. We did not anticipate USD to drop to a low of 148.79. There is a tentative buildup in downward momentum, and USD is likely to trade with a downward bias towards 148.15. At this time, it is too early to tell if USD has enough momentum to break below this level. Overall, only a breach of 150.30 would indicate that the downward bias has faded.