USD/JPY outlook shifted to neutral – UOB

The pair’s stance has now shifted to neutral from bullish and it is expected to gravitate between 112.40 and 113.85 in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we expected a lower USD yesterday, the ease of which the strong 113.30 support was taken out came as a surprise. Downward momentum is picking up quickly and further weakness seems likely from here. That said, the major 112.50 support is unlikely to come under serious threat (minor support is at 112.75). On the upside, 113.55 is expected to be strong enough to cap any intraday recovery (minor resistance is at 113.30)”.

Next 1-3 weeks: “The break of the 113.30 stop-loss indicates that the bullish phase has ended. The 114.50 target was not met as USD retreated after hitting a high of 114.44 last Friday. 114.44 is viewed as an interim top and the current movement is likely part of a consolidation phase. That said, the immediate bias is tilted to the downside but at this stage, a clear break below the expected 112.40/113.85 sideway trading range is not expected”.