USD/JPY clings to the neutral bias near term – UOB

FX Strategists at UOB Group remain neutral on the pair, expecting it to keep the sideline theme for the time being.

Key Quotes

24-hour view: “While we expected a lower USD, the sharp decline exceeded our anticipation by easily taking out the 109.40 support (low of 109.30 at the time of writing). The rapid decline appears to be running ahead of itself even though a test of the 109.00 support would not be surprising (the next support is at the week’s low near 108.73). Resistance is at 109.70 but only a move back above 110.00 would indicate that the current weakness has stabilized”.

Next 1-3 weeks: “After coming close to the top of the expected 109.20/111.05 consolidation range two days ago (high of 110.94), USD is currently approaching the bottom end of the range. The volatile price action was not exactly expected and looking further ahead, the downside appears to be more vulnerable and would continue to remain so unless USD can reclaim and stay above 110.00 within these 1 to 2 days. That said, only a clear break below last week’s 108.73 low would indicate that USD has moved back into a bearish phase (with an immediate target of 108.10)”.