USD/JPY: Shrinking odds for a drop to 104.70 – UOB

In opinion of FX Strategists at UOB Group, a move to 104.70 in USD/JPY appears to be losing momentum for the time being.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could edge upwards but a clear break of the major resistance at 106.55 appears unlikely’. Our view was not wrong as USD touched a high of 106.55 before easing off to close the day little changed at 106.17 (-0.01%). Momentum indicators have turned ‘neutral’ and for today, USD is likely to trade sideways between 105.80 and 106.35.”

Next 1-3 weeks: “After plunging to a low of 105.18 last week, USD has not been able to make much headway to the downside as it traded sideways to slightly higher over the past few days. Downward momentum has deteriorated rapidly and the odds for USD to test the solid support at 104.70 have diminished. However, only a breach of 106.55 would indicate that USD has moved back into a consolidation phase. Meanwhile, USD has to move and stay below 105.80 within these 1 to 2 days or a breach of 106.55 would not be surprising.”