USD/JPY room for a drop to 108.60 – UOB

FX Strategists at UOB Group suggested USD/JPY could slip back towards the 108.60 area in the next weeks.

Key Quotes

“The ease of which the key 110.00 support was taken out was unexpected. The sharp decline is accompanied by impulsive momentum but any further drop is expected to be at a slower pace (due to oversold conditions). From here, 110.05/10 is expected to be strong enough to cap for a move lower to 109.20, with lower odds for extension to 108.80”.

“The sudden break below 110.00 yesterday was clearly unexpected. The sharp decline appears to be running ahead of itself but there is room for further extension to 108.60. In order to maintain the current momentum, any short-term rebound should not move back above 110.65. On a shorter term basis, 110.05/10 is already a strong resistance”.